Any business can export products or services but the process can be complex and challenging and success is far from guaranteed. Yet, when it is approached with careful deliberation, exporting can be a rewarding growth strategy for any business. Here are ten key steps to take your export efforts from start to success:
1. Make the commitment.
Whether you own a sole proprietorship offering consulting services or manage a 1500-person manufacturing facility, exporting offers you opportunities for growth, increased sales and diversified markets. But a marketable product or service is only the beginning.
Exporting takes time and effort. It also takes resources and a strong commitment to compete beyond your current borders. If you are focused and have assessed your readiness to enter the global marketplace, you are ready for the next step.
2. Plan, plan, plan.
The secret to export success is preparation and a carefully researched plan. This is your source of direction as you embark on your journey into foreign markets. An export plan helps you to act – rather than react – to the challenges and risks encountered in international business. And in addition to helping you implement your export strategy, it can help you obtain financial assistance, investors or other strategic partners required to make your export venture a success.
An export plan comprises many elements – a description of your company, its market and industry, and your business objectives; information on your products or services; an analysis of the target market and industry, including trends and forecasts; an examination of the competition and their strengths and weaknesses in contrast to your own; international marketing strategies, including customer profiling and the development of sales and distribution channels; employment and training issues; financial requirements and forecasts; and much more.
3. Conduct research to find the right market.
Thorough market research helps you make sound export marketing decisions by giving you a clear picture of the economic, political and cultural factors that affect your ability to sell your product or service. Ultimately, market research saves you time, money and effort by reducing your exposure to unknowns.
There are two main types of market research. Secondary market research consists of information collection from published sources (books, newspapers, market reports, studies, and periodicals) and the Internet.
Primary market research helps you fill in the critical gaps through direct contact with key experts, customers or other sources of information. Primary research frequently involves personal contact techniques such as interviews and consultations and is best attempted after you have familiarized yourself with the potential market through your secondary research efforts.
4. Devise marketing strategies for your target market.
International marketing is not the same as domestic marketing. Those who ignore this fact do so at their own peril. As successful as you may be at reaching your local customers or clients, you must be aware that your international audience will frequently have different tastes, needs and customs. Good marketing strategies help the exporter understand and address these potential differences.
These strategies are captured in the international marketing plan, a flexible document that will likely be reviewed, revised and modified throughout your exporting activities. Marketing is a continuous activity and so is marketing planning because you can never know enough about your customers and how to meet their needs. The basic marketing formula – the four “P’s” of product, price, promotion and place – is just the beginning when it comes to international marketing. Your plan will need to address many other factors, such as payment (international transactions and currency exchanges), paperwork (increased documentation), practices (different cultural, social and business styles), partnerships (strategic alliances to strengthen your market presence) and protection (increased risks relating to payment, intellectual property or travel) and many more. Understanding all these facets of international business will transform your marketing plan into marketing action.
5. Enter the market.
The research is complete and the export and marketing plans have been devised. You feel ready to enter the market and are seeking the best strategy to reach potential customers. There are as many market entry strategies as there are markets; however, these strategies can be loosely grouped into three categories. Direct exports, as the name implies, involve direct marketing and selling to the client. In a reasonably accessible market such as a neighbouring country, direct exporting of products or services may be a viable option. But in less familiar markets, with different legal and regulatory environments, business practices, customs and preferences, direct exporting may not be an option. A local partner, for example, may be better able to manage these complexities and serve your potential clients better.
Indirect exporting is frequently used to enter new markets. Businesses selling products enter into an agreement with an agent, distributor or a trading house for the purpose of selling (or marketing and selling) the products in the target market. Due diligence is critical when selecting an agent or distributor for indirect exporting.
The third market entry strategy involves strategic partnerships with other companies or individuals with complementary skills and capabilities. A partner can often provide the insight, contacts and expertise that fills the gap in your export readiness. A strategic alliance with a company selling a complementary product or service can provide more effective market access, resulting in more foreign sales in less time. As with indirect exporting relationships, contractual agreements with partners must be stated in clear terms.
6. Get your product or service to market.
Every market has its own set of rules and regulations covering safety, health, security, packaging and labeling, customs and duties among other things. Additionally, these rules and regulations may vary depending on the product or service you are exporting. It is critical that you understand the rules and regulations that apply to you before you ship your goods or open your foreign business location. Product-based businesses with shipping requirements will benefit from developing a relationship with a freight forwarding company and a customs broker. Whether you are shipping by truck, rail, sea or air, the documentation will likely be extensive and potentially confusing. The services provided by these businesses will assist you in determining the most efficient and least risky options for shipping your goods across borders.
7. Explore financing options.
While there are overnight export success stories, most companies must be prepared to invest both time and financial resources to see the return on their investment and the subsequent success. Consequently, financial stability and a secure cash flow are important during this period. In some cases, businesses can rely on their domestic sales to sustain their early export efforts. If this is not possible, it is a good idea to know what financing options are available. Exporters must develop a financial plan to understand and address the diverse costs associated with exporting, complete with a two- to three-year cash budget to cover expenses and a capital budget. A capital budget is a cost-benefit assessment of your export objectives and serves as your operating plan for measuring expenditures and revenues.
8. Understand the legal and regulatory issues.
Exporting exposes businesses to unfamiliar laws and regulations. There are numerous international conventions, treaties and national, regional and municipal rules that can affect your ability to operate successfully in foreign markets. Exporters may also encounter disputes with agents or distributors, clients or creditors. It is important to understand your rights and obligations when resolving disputes, selling goods or services and protecting intellectual property.
9. Put it into practice.
You have committed yourself to exporting. You have the skills and the resources to undertake the challenge. You have researched the market and prepared your export plan, international marketing plan and financial plan. Your market entry strategy is clear and the support system (i.e. freight forwarder, customs broker, financial lenders, legal advisors) is in place. You have gone through the export process step-by-step and feel confident that you have covered all the bases. Now, it is time to put all this skill and knowledge to use. The world is waiting for your product or service!
10. Get help from your local Chamber of Commerce.
Chambers of Commerce are committed to helping businesses across the world thrive in global markets by offering comprehensive export information and services. These tools are designed to help both experienced exporters and potential exporters plan and implement their international business ventures from start to success.