How European businesses can break into the UK market

Much has been written about the effects of Brexit on the UK, and how UK businesses have been hampered in their efforts to reach the EU market. However, less has been said about the reverse situation. While the EU is large enough to manage the loss of the UK economy, it is nonetheless a world leader in various markets.

Losing access to the UK marketplace means missing out on almost 70 million potential customers, and one of the highest adopters of online shopping and payments. Here then is a rundown of what you need to enter the UK market successfully - and a few pointers on the best way to achieve this in a post-Brexit world.

Calculate your costs

The first thing to bear in mind is how you intend to transport or ship goods to the UK, and how this has been affected by Brexit. While the UK is still an enormous and valuable market, the barriers that Brexit presents to trade can make it untenable for some businesses. Before you do anything else, you should read through the UK government’s guide to exporting to the UK, and plan out your expected costs against returns.

The biggest change for exporters to the UK is the complexity of the customs process. Instead of the frictionless trade businesses will have experienced before Brexit, there are now different processes for different kinds of goods, all of which add an administrative burden. While you aren’t being charged more to export, the requirement to have a representative manage the process for you - and to complete the required paperwork - can cost more than you make from your sales.

Related article: Advantages to setting up in the UK post-Brexit

The amount of paperwork and the costs involved will vary on the type of product, and the differing UK legislation which governs it. For example, ‘controlled’ goods such as animals and animal products or medicines fall under specific standards in the UK, which you will have to show that you have met. Other products which are not ‘controlled’ will require less in the way of certification, but may still incur added fees for shipping and processing.

Open a company in the UK

To limit the headaches that could potentially occur with added Brexit bureaucracy and customs paperwork, many business owners wanting to trade with the UK are actually opening a branch or setting up a company in Britain.

As opening a limited company in the UK is very quick, many entrepreneurs are choosing to go down this route. A company can be set up in 24/48 hours from submission of compliance documents, while the European average for setting up a business is somewhat longer, sometimes running into weeks.

Related article: Guide to importing goods into UK

Doing business in the UK is extremely easy and business processes are flexible when compared with the equivalent processes within EU companies. The UK economy is one of the most liberal within the European continent and actively encourages Foreign Direct Investment and the legal framework is among the most flexible in the world. These are just some of the reasons why business owners are deciding to set up in the UK themselves, rather than having to navigate the new Brexit rules.

Research the market

As an English-speaking western country, it can be easy to assume that you know enough about the UK's business environment. While the wants and mores of UK audiences may be easy to tune into, the market however is mature and hyper-competitive. Businesses exporting to the UK will have to be extremely calculated in how they position their products, and the best way to gain a foothold.

As in most countries, local products tend to be treated preferentially, although this can depend on the nature of the product. The easiest ways to stand out are to demonstrate superior quality, adopt an appealing price point, or identify weaknesses of competitors that you can address. For example, as chocolate bars have got smaller in the UK, a bigger and thicker bar might be a USP, and something to put on the packaging.

You should also consider how people typically access their goods - in other words, where they purchase from and how they do it. If you are coming from Germany, for instance (where ‘pay later’ options are commonplace), you may be surprised that delayed payments are not yet fully embedded in UK shopping culture. Equally, you may be surprised to find how dominant online shopping is, and how ubiquitous card payments are.

Take advantage of subsidies

Businesses will often start a separate business or subsidiary in the UK to help ease the administrative process, and have a destination from which to sell and ship goods. One of the great benefits of doing this is the UK’s low corporate tax rate, as well as a generally favourable business environment. In this instance, your business may qualify for funding from a number of different sources - particularly if you’re actively developing products as well as selling them.

The Gov.UK website has a fairly comprehensive list of the grants, loans and other financial incentives you may be eligible for depending on the region you set up in. Ones that particularly stick out include Innovate UK, Horizon Europe and the general R&D tax relief. Innovate UK often applies to joint research and development efforts, while R&D tax credits are applied slightly differently depending on the size of your company. Horizon Europe funding meanwhile remains accessible to UK-based companies despite leaving the EU.

Businesses who do develop innovative technologies or products stand to receive a larger share of the revenue from patents, with profits only being taxed at 10% rather than the usual 19%. If you aren’t planning on any R&D, you can still benefit from the availability of venture capital and angel investors, particularly in London. Incentives including the Enterprise Investment Scheme and Venture Capital Trusts provide tax relief for investors in UK businesses, making it an ideal environment to scale and grow.

Build relationships

You probably don’t need telling, that the art of doing business is often about meeting the right people. This is as true of the UK as it is anywhere else, though the methods might differ slightly. This is particularly true given the effects of the coronavirus on physical meetings. While more meetings may end up on Zoom in future, however, the traditional networking soiree is likely to continue, as are the other methods of meeting business leaders.

Perhaps the easiest and most common way to network is via LinkedIn. By following relevant UK business leaders and engaging with their content, you can start to build up a relationship and add valuable contacts. This is something you can then harness to build your own audience on LinkedIn, and publish content that establishes your reputation in the market. Eventually, the connections will come to you, and new doors will start to open.

Face-to-face networking opportunities remain a key part of UK business culture, however, and are likely to for some time to come. A Google search should help you to find the Chambers of Commerce in your area, which tend to host regular events in exchange for a membership fee. These are a great way to meet a variety of local business owners, and to quiz people about the marketplace, helping to develop your understanding of your market and customer base.

Exporting to the UK is a worthwhile endeavour if you can get it right, but to benefit from grants and reduce your paperwork, you generally need to start a UK business or subsidiary. If you’re looking to start a business in the UK, France or anywhere else in Europe, Euro Start Entreprises can help. We’ve been helping businesses to start-up and grow since 2007, with a wealth of contacts and expertise across the continent. You can download our free guides below, and either contact us on 0033 (0)1 53 57 49 10 or email us from our contact page and we’d be delighted to help you.

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