So you want to expand globally ...
An entreprenur eying a UK expansion checks in with Ask FSB for the lowdown on what to prepare.
(FORTUNE Small Business) -- Dear FSB: I run an e-commerce business (science lab notebooks for high schools and colleges) here in the U.S. I am thinking about expanding my business to the U.K. market. What do I need to know? Do I have to collect the VAT if I ship from the U.S.? If I set up a physical location in Britain for my inventory, office, etc., what do I need to know? Where can I find more information about entering the British market?
- Agnes Klich, Northville, Mich.
Dear Agnes: First you need to do market research to determine if your product would be in demand and competitive. You also need to figure out how you will promote and distribute your product in Britain, says Doug Ware, a former manager at Westinghouse Electric Corporation and counselor for SCORE, a mentoring program for small business owners run by the Small Business Administration.
"The U.S. commercial service offers assistance in market research for exporters," says Ware. You can find the closest Michigan office here.
Once you have done the necessary research and you have a viable business plan, you should address the cost of international business, including the VAT.
"Typically the importer pays the VAT - you should factor that into your pricing," says John O'Gara, senior international credit officer with the U.S. Export Assistance Center in Detroit.
"Custom duties and VAT depend on the value and commodity code of your product," O' Gara says. "Information on import and import documentation requirements for Britain can be found on http://customs.hmrc.gov.uk."
O'Gara also recommends working with a trade specialist in your area - which you can find on the Commerce Department's website.
"The Department of Commerce would be happy to work on any issue you have with licensing, or help U.S. companies find markets and buyers in foreign countries," he says.
Someone at the Commerce Department can work with you one-on-one to answer questions regarding licensing, shipping, insurance, financing, and getting paid.
Once you're set up, there are a number of global logistics companies that provide shipping, brokerage services, warehousing, and distribution, including UPS (UPS, Fortune 500), DHL, FEDEX (FDX, Fortune 500), and Hellmann.
Britain's Department for Business Enterprise & Regulatory Reform (BERR) provides import and export guides and information sheets on their website. Import licensing advice is available from the DTI's Import Licensing Branch.
You may also find assistance from the following organizations: