Though the potential rewards are great, exporting is not without risks. Businesses that jump in too early run the risk of jeopardizing their current business activities. The questions are: are you ready to do that? And are you ready to export?
You need to be realistic about what exporting entails and what it takes to succeed. Develop a business plan with clear and achievable objectives that will help you identify where you are, where you are going and how to get there. As you draft it, think about whether you can answer “yes” to the following questions:
Are you committed and open to new ways of doing business?
Developing a market can be costly in terms of time, money, and resources. It requires regular visits to the market to develop relationships. Your entire business needs to be committed to this from the ground up.
Do you know your product or service?
It is important to know your product or service and its marketing advantages. Are there modifications required to make it appeal to foreign customers? If there is a shelf life of your product then you will need to factor in time in transit.
Do you have enough market knowledge?
Successfully launching a product in a domestic market can be unpredictable at the best of times, let alone throwing cultural and language differences into the mix. You need to know who your target customers will be, what motivates them and what other products or services already exist in the country you’re looking to export to. If you do not yet have the resources to do this market research or a strong understanding of consumer behaviour in overseas markets – then go back to the drawing board and plan.
Do you have capacity and resources?
Will you be able to serve both your existing customer base and new foreign clients? It’s not just a case of opening an office or sending your products to another address. Your team must be committed to succeeding in both markets. You may need to hire new members of staff who have culturally sensitive sales or marketing skills or speak multiple languages. You may also need to think about different time zones to be able to respond to queries quickly and efficiently.
Can you justify your market and pricing choices?
You need to have done the research and have solid figures in hand to validate both the potential and the investment. If not, book more flights, get your feet on the ground, and talk to more people with knowledge of the market.
Do you have the financial and legal resources set up?
Have you got access to capital or lines of credit to produce the product or deliver the service through a potentially extended trade cycle? Breaking into an offshore market requires considerable funds for, among other things:
- trade fairs
- sales promotion
- new brochures
- training of overseas sales agents
- Ongoing FX exposure through different monetary systems
You also need to watch out for hidden costs relating to language and cultural issues, and the time you need to spend building relationships and intellectual property protection.
Need further help?
Check out Accelerated Payments Individual Export Finance product which has been designed to help you understand how to finance, grow, and manage your cash flow from overseas.