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With President Trump’s planned corporate tax cuts and other favorable business conditions, there’s no better time to be based in the U.S. However, this domestic success also provides an ideal platform for small businesses thinking about expanding further.
Here are 10 top tips for expanding your goods and services in Europe and around the world.
Sales tax is complicated
You might think that the European Union would have standardized sales tax, but you’d be wrong. Each nation has its own tax rate, and you are required to pay what’s called Value Added Tax (VAT) to whichever nation the sale comes from, assuming the sale is above a certain value. Most consumers will also expect to see this final total reflected in the ticket price, well before they get to the shopping cart.
Thankfully, there is a system to help you navigate this process: the Mini One-Stop Shop, or MOSS. Non-EU companies are free to register to use this system in the UK, Ireland or Malta, and other regional equivalents do exist.
Import duties can differ wildly…
Some goods that are classified as duty free “hobby items” or essentials in America have no such distinction in countries like the UK, where the buyer may be liable for import duty. If it’s a high value item, they may also have to pay a customs tax upon receipt.
Customers may be aware of these rules, but try to pre-warn them. And don’t be tempted to “gift exempt” goods. This is at the best legally questionable, and has also been earmarked (and stamped down on) by many EU territories.
…and so can payment processing
PayPal remains a fairly universal standard, but it doesn’t cover all the bases. Some countries favor credit cards or even checks, while others have their own dominant services, such as Holland’s iDEAL or Germany’s ELV.
Look into the favored methods in the countries you plan to expand to, and find a solution that covers as many bases as possible. Many businesses have moved to Stripe, which recently added support for most of Europe’s dominant payment options.
Localize your logistics
Europe’s dominant logistics services are DHL and TNT, although once again, some countries have their own preferences. Some also have unique quirks. Spain, for example, has a notoriously slow national carrier where parcels can get stuck in transit for weeks.
It’s well worth looking into how these companies are perceived, as well as how much it will cost you to ship. Cheaper may ultimately be better, but you want the product to arrive intact.
Be mindful of Brexit
Britain is one of the world’s leading consumer markets, with an extremely well developed online economy. But Brexit may lead to changes in how sales tax is collected, and other unforeseen consequences for imports and business regulation.
Nothing will change for at least two years as the deal is being negotiated, but it will pay to be mindful and to keep an eye on the UK’s revenue information site, HMRC.
You may need to translate
Some businesses choose to focus on the Netherlands and Nordic countries, as they have an extremely high proportion of English speakers. But even these would prefer to shop in their own language. Apart from anything else, it shows that you care about securing their business.
Translating into one language could cover several regions, but even countries that speak the same language have regional dialects, such as the Netherlands and Belgium. Take the time to research your markets, and make sure your pitch makes sense (and isn’t offensive).
Many people prefer to buy local products, or at least those tested to local standards. Local offices or distribution can help with this perception, and business advisory companies can help to secure local certifications.
A partnership or local distributor isn’t realistic for most small businesses, but your presence doesn’t have to be physical. Even a virtual office service, which tends to include a local registered address and some element of mail or call forwarding, could make the difference.
One of the biggest barriers in international shipping is the fear that customers won’t be able to return or refund goods that are damaged, or that they otherwise aren’t happy with. The likes of Amazon’s no hassle pickup and returns service has raised the bar for everyone.
You should do all you can to reassure customers that goods will be securely packaged and handled, and that the returns process will be easy when necessary. This also extends to customer service. If you’re selling in German but don’t have a means to speak to customers in German, their efforts to return a product or diagnose an issue may be frustrated.