If there is one truly concerning economic aspect of Brexit, it revolves around Britain's growing status as a net importer. After all, the sustained devaluation of the pound means that importing goods from overseas will be far more expensive after the EU trade agreement has been terminated, particularly with this region currently accounting for 43% of our total spend.
In this respect, it is little wonder that many UK-based entrepreneurs may be looking to relocate their business abroad, or at least alter their infrastructure to place a greater emphasis on overseas trade.
In this post, we will look at the best methods for financing an overseas venture in the prevailing economic climate:
Liaise With Export Credit Agencies
This is one of the more traditional vehicles for funding an international business, as export credit agencies (ECAs) have been established for generations. In simple terms, they provide financing for locally produced goods and service, while also taking care of numerous costs including shipment and destination country tax levies. It is estimated that up to 85% of your anticipated costs can be accounted for through this method, while the typical duration of agreements ranges from 6 to 15 years depending on the nature of your venture.
Leverage Currency Rates to Your Advantage
While you can make incremental savings as a budding, international entrepreneur through budget travel, there are additional steps that you can take to effectively finance your venture.
By leveraging currency rate fluctuations and using these to your advantage, for example, you can reduce the cost of establishing your overseas business and ensure that your capital stretches as far as it possibly can.
To achieve this, you will need to spend time monitoring currency fluctuations in line with global macroeconomic climate, using resources such as LCG to track live rates. This will inform the nature and the timing of your decisions over time, while it will also expose you to the volatility that underpins the currency market.
Seek Out Country or Private Equity Funds
This may be the most suitable option for established firms that are looking to expand, particularly those looking to enter competitive market spaces such as Asia. The majority of such nations have dedicated private equity funds with the purpose of investing in attractive commercial opportunities, while there are even some industry-specific funds available to a select group of entrepreneurs. These groups can be accessed through central and merchant banks, who can help to make introductions and appropriate private funding for their clients.
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