10 risk strategy tips for export expansion
Businesses are always keen to grow by exporting to new markets. However, they must balance the risks of exploring new territories with the opportunities opening up to those bold enough to take them.
Risk is inherent in any new market, even when the world isn’t emerging from recession. But when sales dry up or reach their full potential the chance to generate other revenue by increasing the number of places where you sell should not be ignored.
Australia’s export outlook is promising. Its largest merchandise export market—China—is the world’s most buoyant economy. Growth in the People’s Republic and other parts of Asia has prompted the Australian Bureau of Agricultural and Resource Economics (ABARE) to predict exports above AU$200 billion this year.
So, profits can be made by creating a strong competitive foothold in a different country. The question is, how to enter such potentially rich but risky territories safely?
The obvious route is to test the market first. The key is to show commitment to the market you’re targeting. Customers want to do business with companies that are present in their market, where they know they can reach them or visit their offices if they want to. It’s also important for them to work with people who understand the local market and culture.
However, the start-up costs for establishing a presence can often be daunting. Finding, leasing, fitting out and maintaining an office is no small task, let alone when your local knowledge is not strong.
One way to bypass this is using a virtual office to establish a presence before opting for a physical office. A professional receptionist handles the calls, in the local language—without any upfront capital expenditure.
Keeping your office use and your workforce flexible will reduce real-estate costs by up to 60 percent. If your company is less reliant on workspace it will be less vulnerable to market fluctuations.
10 ways to reduce the risk of exporting
Companies can establish a business or branch abroad without undue expense. The secret is to use smarter ways of working to lower overheads while maintaining flexibility and mobility.
My 10 tips for moving to a new market without taking too many risks are:
1. Research your market extensively and plan fully—make sure you understand the country’s ways of doing business and the state of its economy.
2. Your strategy should be to test the water first rather than committing yourself straightaway to a permanent presence in an unfamiliar market.
Got something to say? Join the export forum here at DynamicExport.com.au.
