If getting export ready is a core goal for your business, you probably have a lot of questions. Which markets should I look to? Where can I go for advice and support? What are my tax obligations when turning a profit overseas?
It's true, exporting can be risky. However, it can also provide great opportunities, as Haka Tourism - winner of the 2019 NZ Export Awards BDO category - has found.
To help your organisation emulate their international trading success story, we've highlighted a number of common mistakes businesses make when exporting, so you can avoid them.
1. Becoming accidental exporters
Benjamin Franklin's famous quote, "By failing to prepare, you are preparing to fail" could have been written as a mantra for prospective overseas traders. Becoming an accidental exporter is perhaps the most dangerous example of failing to prepare in this context.
By accidental exporters, we mean businesses that don't make a conscious effort to move into an overseas market, and instead simply fall into it. This can happen surprisingly easily - after all, every business is looking for new opportunities for growth. Without realising the ramifications of what's happening, your overseas contact can quickly become a trading partner, turning your company into an exporting business, but one that lacks the necessary groundwork.
2. Selecting the wrong business model
Even if you aren't an accidental exporter, if you're new to cross-border trading it can be difficult to select a model that fulfills your objectives and suits the conditions of an unfamiliar market.
While you don't want tax to dictate your every business decision, when it comes to exporting your structure needs to be tax efficient. At BDO New Zealand, a huge part of how we help Kiwi businesses get export ready, is ensuring their exporting model is as tax efficient as possible from the get-go. Double taxation, in which profit is taxed once in the country where it was made, and again when it returns to New Zealand, is just one example of the penalties that exist for businesses who don't get their structure right.
3. Not taking advice early on
There are lots of potential avenues that would-be exporters can mine for information prior to making any firm commitments. Among the best source for key insights are:
- ExportNZ and NZTE - These organisations can help you explore the risks and opportunities available in different markets. If you have questions about currencies, or perhaps the political situation in a country you want to do business in, they can provide you with up-to-date information.
- Overseas contacts - If you have contacts within a market they should be able to provide nuanced detail that isn't immediately obvious from the outside. Potential joint venture partners are another useful touch point.
- BDO New Zealand - Many of our clients benefit from the fact that we have personnel on the ground in a great deal of the most popular international markets. Our overseas teams are perfectly placed to help introduce New Zealand businesses to the particulars of trading in that region, and answer any questions you may have.
Wherever you gather your information, it's important you do this proactively. You can save yourselves significant amounts of time and money by getting your processes right from the start, as opposed to fixing them once you've realised they're not as efficient as they could be.
If you want to find out more about how you can set up your business for export success, get in touch with BDO New Zealand today.