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
Cons of Exports
To export goods, countries may need to incur high transportation costs and the risk of loss due to the transportation of goods. If ownership of the goods does not pass to the buyer until goods are received, this may make the exportation unduly risky for the exporter.
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 rowsExport promotion leads to expansion of goods for the foreign market. Export promotion industries have a wide market for their produce for both domestic and foreign markets. They are therefore able to produce for a greater capacity.
Which is not an advantage of exporting? ›
Limited presence in foreign markets is not an advantage of exporting.
Why are exports negative? ›
There can be several reasons for negative net exports, such as: 1. A country might have a high demand for foreign goods and services, leading to higher imports. 2. The domestic industries may not be competitive enough in international markets, leading to lower exports.
What are the disadvantages of importing? ›
Disadvantages of Importing:
- Dependency on other countries arises which is not good for both the Exporter and Country's Growth.
- Manufacturers' mindset gets discouraged.
- In Emergency Times of the Country, things get worse.
Exporting means sending goods produced in one country to sell them in another country. Exporting is a low-risk strategy that businesses find attractive for several reasons. First, mature products in a domestic market might find new growth opportunities overseas.
What are the advantages of exporting? ›
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 is the advantage of exporting or importing? ›
While importing products can help businesses reduce costs, exporting products can ensure increasing sales and sales potential in general. Businesses that focus on exporting expand their vision and markets regionally, internationally or even globally.
What are the disadvantages of export tariffs? ›
The disadvantages of tariffs are as follows:
- Raise the price of the good or service because of increased taxes.
- May lead to shortages by discouraging one country from exporting goods or services to another.
- Increase friction between two countries, hurting their long-term relationship.
Frequently Asked Questions about Export Led Growth
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 disadvantages of export led growth? ›
Export-led growth might be unsustainable if it contributes extraction of natural resources beyond what is required for long term balanced growth to be maintained. Consider for example the impact of deforestation and over-fishing and degradation of land by industrial-scale farming.
What is an advantage of exporting? ›
Exporting can be profitable for businesses of all sizes. On average, sales grow faster, more jobs are created, and employees earn more than in non-exporting firms. Competitive Advantage. The United States is known worldwide for high quality, innovative goods and services, customer service, and sound business practices.
What is the advantage of exporter? ›
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.
