Exportingoutside Northern Ireland can change your business. Like any fundamental change to the way you trade, there are risks as well as benefits you should consider. You should weigh them up before starting to move into overseas markets.
Advantages of exporting
You could significantly expand your markets, leaving you less dependent on any single one.
Greater production can lead to larger economies of scale and better margins.
Your research and development budget could work harder as you can change existing products to suit new markets.
Disadvantages of exporting
Unless you're careful, you can lose focus on your home markets and existing customers.
Your administration costs may rise as you may have to deal with export regulations when trading outside the European Union.
You will be managing more remote relationships, sometimes thousands of miles away.
In overseas markets, you may lose some of the control that you are used to at home.
You will need to think of your new market differently to the home market. They will be different customers with their own reasons for buying your products.
There are ways you can manage the risks of exporting.
Tax considerations when exporting
You will have different responsibilities for VAT depending on whether you sell to other European Union (EU) countries or export your goods outside of the EU.
If you sell to other countries in the EU, you must keep records and submit details of these sales on your VAT return. If you have a high level of sales to EU countries, you must complete an Intrastat Supplementary declaration. Read an introduction to Intrastat.
If you sell to countries outside the EU, you must keep documents that count as proof of export. These must identify:
In both cases, most goods you export will be zero-rated for VAT. You should check with HM Revenue and Customs (HMRC).
FAQs
Advantages of exporting
You could significantly expand your markets, leaving you less dependent on any single one. Greater production can lead to larger economies of scale and better margins. Your research and development budget could work harder as you can change existing products to suit new markets.
What are the disadvantages of exporting? ›
Disadvantages of exporting
- Supply chain disruptions. ...
- High up-front costs. ...
- Export licenses and documentation. ...
- Product adaptation. ...
- Political disruptions. ...
- Cultural hurdles. ...
- Exchange rate fluctuations. ...
- Multi-currency payments.
Advantages of exporting
You could significantly expand your markets, leaving you less dependent on any single one. Greater production can lead to larger economies of scale and better margins. Your research and development budget could work harder as you can change existing products to suit new markets.
What are the advantages and disadvantages of import and export? ›
Export vs Import
| Export | Import |
|---|
| Adds to national income. | Forms a part of national expenditure. |
| Governments encourage exports with subsidies and duty returns. | Governments discourage imports with duties, taxes, etc. |
| Promotes self-reliance and the sale of surplus. | Indicates dependence on other countries. |
2 more rowsApr 8, 2024
Advantages and disadvantages of direct exporting
| Advantages of direct exporting | Disadvantages of direct exporting |
|---|
| Increased profit Increased control Better communication with your customers | Increased workload Limited market knowledge |
Mar 28, 2022
Credit & Financial Risk
When doing business internationally, the risk of nonpayment or default by customers is one of the key issues exporters must deal with. Indeed, export credit risk is among the most significant financial risks a company can face.
What is a disadvantage of exporting quizlet? ›
Exporting goods decreases sales, market share, and profit.
What is not a benefit of exporting? ›
Limited presence in foreign markets is not an advantage of exporting.
Which of the following is an advantage of exporting? ›
Exporting means expanding your market and potential customers worldwide. There is great potential for increased sales, revenues, and profits.
What are two limitations on exporting? ›
Among the limitations on exporting, two significant ones are trade barriers such as tariffs and quotas, and transportation costs. Trade barriers are explicit government policies designed to protect domestic markets and industries.
Common pitfalls for exporters include. poor market analysis. poor understanding of competitive conditions. a lack of customization for local markets, poor distribution arrangements, bad promotional campaigns. a general underestimation of the differences and expertise required for foreign market penetration.
What are the pros and cons of export led growth? ›
Export-led growth has both advantages and disadvantages. While it can lead to increased economic growth, foreign exchange earnings, technological advancement, and specialization, it can also make a country vulnerable to external shocks, lead to inequality, environmental degradation, and dependence on foreign markets.
Why is exporting good for a country? ›
A trade surplus contributes to economic growth in a country. When there are more exports, it means that there is a high level of output from a country's factories and industrial facilities, as well as a greater number of people that are being employed in order to keep these factories in operation.
What are the advantages and disadvantages of using licensing and exporting? ›
Licensing your intellectual property can yield various benefits to your business, but it does come with its risks as well.
- Advantages of Licensing. ...
- Income Without Overhead. ...
- Potentially Better Marketing. ...
- Enter Foreign Markets More Easily. ...
- Diffuse Conflicts. ...
- Drawbacks of Licensing. ...
- Risk of IP theft. ...
- No Guarantee of Revenue.
Advantages include stimulating economic growth, creating jobs, and developing new sectors. Disadvantages could be over-reliance on foreign markets, vulnerability to global market fluctuations and potential neglect of domestic industries.
What are the difficulties of exporting? ›
Business-related exporting problems include: Lack of relevant knowledge - Many entrepreneurs hesitate and procrastinate in their export aspirations because of their lack of knowledge and information. They may have a suitable product but lack the know-how on how to sell it overseas.
What are negative exports? ›
A negative net export figure is a trade deficit for a given country. It means that the overall value of the country's imports is greater than the overall value of its exports. A country with a trade deficit spends more money in a foreign market than it makes.
Why is it bad to rely on exports? ›
Excessive dependence on exports can create imbalances, as a country may prioritize certain industries or products, neglecting diversification. This specialization can leave the economy vulnerable to fluctuations in global demand or changes in market conditions.
