The Australian Institute of Export outlines some practical questions to ask of your export proposition.

Practical Considerations

Product: Only promise what you can deliver. Does the product include technical literature/advertising for new markets? Is the product cleared for entry in buyers market? Are all costs covered in your pricing?

Logistics: Your packaging needs to be sufficient to protect your product during the trip. Are the goods insured until they reach a buyer’s warehouse? Are there temperature/moisture concerns during transport? Have you explored the best options: air or sea/trans-shipment or direct?

Export Pricing: Make sure you are using the correct Incoterms. Can you meet requests for different delivery options? Is the payment method safe? Cost plus or market based pricing?

Payment risk: Ensure you have an enforceable contract in the buyers’ jurisdiction. Do you have different payment methods for different buyers? Is there a plan if they can’t or don’t pay? Are there any currency movement issues?

Country risk: Assess the possible import restrictions, legislation, quotas and bans that might apply to your export. Have you evaluated the political and economic situation of the buyer’s country? Can you safeguard currency transfer risk?

Funding requirements: Do a cashflow forecast for exports. Are working capital lines sufficient for increased export orders? Are there options to fund against receivables/stock?

Documentation: Your export documentation has to meet Letter of Credit terms. Do you have entry documentation issues in certain markets? Are there delays in getting documents for shipments?

Marketing: Think about an appropriate sales model in each market. Are there warranty/returns/ product liability issues to consider? Is there a written agreement in place for your agents or distributors?

Trading partners

The NSW Department of Industry, Trade, Regional Infrastructure and Services offers some practical tips for assessing a potential business partner.

Don’t enter into a deal with a business or partner until you have checked them out, no matter how enticing the proposition may sound. Google them—if you see a string of complaints you probably need to ask a few more questions.

You wouldn’t hire an employee without checking their references, so make sure you do the same for a potential business partner. Ask to speak to two of their customers and/or two of their suppliers—it’s the same as asking for referees at a job interview.

Approach the relevant bilateral chamber of commerce, state or Austrade office in market and ask if they know of the business. You can also run a check with the local equivalent of the Consumer Affairs Bureau or Office of Fair Trading.

Ask for their financials for the past three years—if they are happy to share its a good sign! Has the business had any recent cases of litigation? Usually, cases that have been prosecuted in the public court system will be listed on the web.

If they check out on all of the above, then it is time to check with credit agencies or commercial bureaus like Dun & Bradstreet or Experian to see whether you should extend credit. These agencies have different levels of reports ranging from raw data to very comprehensive and costly reports.

You can do all of this before you get legal teams involved, for a small cost. If you think about the problems you could avoid, it’s well worth the investment.

Currency

Travelex offer tips on how to mitigate currency risk.

If you transact in AUD, you remove currency risk and put this back on your consumer. This is a hard term to negotiate if you are a small exporter, but it’s well worth asking about when you establish the terms of trade. If you receive foreign funds, you have the opportunity to benefit from movements in the foreign and local currency, and can hedge your risk with foreign exchange derivatives.

Market risk: Know your profit margin and the base cost foreign exchange rate you will need to achieve it. Hedge accordingly.

Know your customers: There are increasing cases of fraud especially in certain industries and high-risk countries. Be aware of these industries and markets and take precautions.

Payment method: Understand how you will be paid as some countries still have a high use of cheques. If you are receiving cheques, they can be costly to exchange and have long clearing cycles. It is different to receiving a cheque in Australia. Plan accordingly to ensure your cash flows are not impacted negatively.

When a firm gets into financial difficulty they look for loopholes and reasons to justify delaying payment, or not paying at all. When a sale is made it’s great to celebrate, but we all know things don’t always turn out rosy down the track. One of the best ways to protect yourself and ensure you get paid is to have well prepared, clear and concise Terms of Trade between your business and those with whom you transact. Verbal and handshake agreements may be appropriate in some circumstances, but when things don’t go to plan you want to have something solid in writing to back you up.

I spoke with RP Emery & Associates, providers of contract templates for business. They told me why smart businesses need good Terms of Trade.

Manufacturing Agreement

A manufacturer and purchaser worked well together for a year, but then a dispute arose over an overdue account. The manufacture claimed substantial interest and late payment fees. The case ended up in court, because it was unclear whose terms of trade applied, as there had been express agreement on who made and supplied the goods, but not as to the terms of payment. In this case the Court held that by going ahead and fulfilling the purchaser’s orders, the manufacture had effectively accepted the purchaser’s terms.

The expense and aggravation of having such a dispute resolved by a court is always stressful (and a distraction), so when you enter into an agreement, just make sure that your terms of trade are also signed by the other party.

Similarly, when it comes to licensing and distribution agreements, it is important to make sure that there is a clear understanding between the parties, as to what the intellectual property component really means. It is commonly thought that one can get around design, copyright, or a patent merely by changing the product by X percent, but that is folklore.

IP Terms of Trade

Just this year, Solitaire Homes won a landmark case in which an architect made what he thought were adequate changes to a Solitaire project home design. Once it was established that the architect had in fact based his drawings on the Solitaire design, he was guilty of copyright and trademark violation. So acknowledgement of your copyright and other IP in your terms of trade is critical.

Addressing matters such as these in your terms of trade will keep you out of court. Even the judge commented in the Solitaire case that after five years, the legal costs exceeded the cost of construction of the house, let alone the damages awarded!

Personal Guarantees

Another very important issue is the question of personal guarantees. There was a case in which a company delivered industrial design services and did not get paid by the purchasing company. A magistrate held that, because a director of the purchaser used the word ‘I’ in a letter (rather than ‘the company’), there was an implied personal guarantee, and awarded judgement against the director. Now, the fact that this decision was clearly wrong at law is irrelevant: the director had to appeal to the Supreme Court on a matter of law, and it was cheaper to pay the bill rather than incur the costs of a Supreme Court appeal.

The lesson to be taken from that case is that the terms of trade did not exclude directors’ guarantees.

Import/Export

When it comes to international trade (import/export), the subject takes on an entirely different hue. For example, you need to be aware of roughly five kinds of commonly used international trade documents—government control documents; commercial (invoice) documents; banking documents; shipping documents; insurance documents—and any one of those can bring you undone if you haven’t done it right.

Also, we all understand the definition of ‘quality’ under Australian law, and the implications of the Sale of Goods Act. But do you understand the United Nations Convention on Contracts for the International Sale of Goods? This convention defines such things as ‘material breach’ and ‘minor breach’ of contract and these have a significant impact on how disputes are handled in the global arena.

This means that you must be across the requirements of establishing quality, and that may be through inspection: sample; grade and standard; and brand or place of origin. These issues bring into play the methods of payment (irrevocable L/C; mail transfer; demand draft; telegraphic transfer) and making sure that you understand the effects of the pricing methods (FOB; C&F; CIF; DAF), because these aspects all impact on the documentary collection and the rights and obligations of the banker at either end.

Sounds complicated? You betcha! It is, but in a global world, we all have to come to grips with these complexities.

Terms of Trade considerations

Other items to be considered in your terms of trade are:

• How will the goods be ordered?
• How will the orders be confirmed?
• Will buyer/seller be entitled to cancel orders?
• How is the price to be paid?
• Are there handling/admin fees?
• Are there penalties for late delivery/late payment?
• Can either party offset amounts owing against an order?
• How are credit facilities to be assessed/granted?
• What defines delivery/collection?
• Can orders be cancelled if not delivered by a certain date?
• Must seller notify purchaser if delivery date changes?
• Can goods/services be delivered in instalments?
• What are the consequences if purchaser fails to accept delivery?
• Can seller retain title until paid?
• Does retention of title outlive termination of agreement?
• Is confidential information being imparted, and how is it protected?
• Are there any Privacy issues?
• Should either party have the right to terminate without cause?
• What are the consequences of termination?
• Have warranty and liability issues been adequately addressed?
• Are there guarantors, and are the guarantee terms clear?
• The laws of which State apply?

As you can see there is a lot involved in the delivery of a service or product. It just might save you a lot of money to have a clear understanding by all parties from the beginning, rather than having to go to court and incur a lot of unnecessary legal fees to sort out a problem later.

—Sue Hirst is the founder of CAD Partners – CFO On-Call

Unfortunately, there isn’t always a quick answer. I have helped many companies establish their business offshore and I usually take a very simple approach to this by working with them to answer the following questions:

Why go global?
What is the organisation trying to achieve? Is it ‘hard’ benefits (e.g. more revenue, customers, profit, scale, diversification) or are there ‘softer’ benefits (e.g. more excitement, travel, challenges, culture) that drives the organisation? It is easy for entrepreneurs to get caught up in the excitement of travelling overseas: sometimes my job is to stop them jumping on a plane and persuading them to stay at home to do some research first!

Where should you aim your business?
This is often the hardest question. With so many countries clambering to get hold of your unique product, service or capability, where on earth do you go first? Do you start with established markets like the US, UK, Europe or Japan, or do you look to the world’s emerging markets, notably China and India, with the biggest populations? You need a dispassionate, objective and sound approach to choose one country over another and this often takes time and research to do properly.

What are you exporting?
What product, capability or service are you going to export? How will this have to be adapted for new markets? How can you build a value proposition in a new market? How scalable is it? Will you be a niche player or do you need volume to make profits? You must understand all of this before going any further.

How will you approach the overseas market?
What do you know about the markets you are developing? What are the factors that will lead to success or failure? How committed are you to success in new markets? How much do you know about some of the cross-cultural aspects? What else will you need to learn to be successful?

Who is involved?
What extra support, resources and financial backing will you need to succeed offshore? Who do you need to involve, both internally and externally? Who can you go to for capital if you need it? Who will you appoint to develop your offshore business? Is it one of your top people? How will this impact on your domestic business?

When will you go global?
How and when will you launch offshore? Will you do one major launch or a series of soft launches? How will you ensure you are fully prepared? What happens if you achieve more than you expect? Can you cope?

As you can see, there are many issues, challenges and points to be addressed, and all of them take time to research, review and assess properly. Like all things in life, having a plan before you get started is a good idea!

Acquisition

It’s a serious undertaking when a business decides to acquire another, particularly if the acquiring business is a small or medium-sized one. While having enough money is usually a major concern for all types of takeovers, acquiring an overseas business will also require significant thought in regard to legal and cultural considerations. This is a guide that outlines how smaller businesses should approach the acquisition process.

Secure your strategy

Be very clear about why you’re considering acquiring the other business. Acquisition has many benefits, notably related to speed in gaining market share, technology and/or skills.

“If you’re in a market and only have a small market share, there’s probably going to be a long path for organic growth. You may want to acquire to increase meaningful market presence,” says Symon Brewis-Weston, executive general manager of Local Business Banking at the Commonwealth Bank. “You may use acquisition to enter a market. So in a market where you don’t exist, instead of starting a business from scratch you may just acquire a business.”

He also nominates possible advantages such as gaining scale or cost efficiencies, or buying the human capital of the other business: “You might acquire because you think they may have a better R&D capacity or a better skill base or technical expertise.” Reducing competition, or diversifying your business are also common reasons for acquisition.

As an expensive, research and time-intensive process, acquisition may compare unfavourably to other methods of reaching your business goal, such as licensing another firm’s intellectual property, attaining a certain skill base through outsourcing or setting up a joint venture.

Clive Rabie is the CEO of the Reckon Group, which comprises of business services and software. “We like to buy best of breed technology as opposed to customer bases,” he says. The process then includes the human resources level—”look at the management and the people involved”—before the numbers: “Look at the earnings, numbers and profit against capital requirements, how capital intense it is, and look at your own financial position: whether you’re growing organically.”

In the end the equation should be fairly simple: “The main drivers are whether it’s strategic to your business. The next thing I would look at is whether it’s synergistic and then how it affects your business,” he adds.

Plan for people

One area that should attract as much attention as the finance aspect is cultural fit. Not only do businesses have different cultures within them, when you’re trying to join two businesses from different countries it’s a more significant factor than usual. Your handling of culture could mean the difference between success and failure.

“When you want to go overseas there’s a whole other layer of cultural focus as opposed to just being in Australia,” notes Rabie. “If you’re going overseas, add another layer of consideration: ‘okay, how do we manage? What sort of relationships do we have on the ground in those places? What are the risks? Who, locally, can look after that relationship?’ On the positive side, from the acquisition what can you bring back home? And that goes back to the synergies.”

Brewis-Weston agrees that not enough attention on culture can lead to problems: “The biggest risk that I see is where you’ve acquired people to do a job and you’ve imposed a way of doing business that might be different. It can lead to a great deal of disenfranchisement.”

Looking internally, he insists that businesses understand the cultural reasons for why your business is already successful, as well as understanding the skill capacity of your staff. On an external front, do some research on the operating context of the business to be acquired.

“Understand the culture of the country and try to get as much of an understanding as you can of labour laws and culturally how those people operate. Typically, most people fear the acquirer unless it’s a survival thing, and most people will assume that costs will be cut,” he notes. “You have to be clear about the messages that you’re going to bring, and try and have people on board who can advise you of the cultural issues and how to manage that.”

Brewis-Weston admits that a number of acquisitions lose value because the acquiring business has either overpaid because they don’t understand the asset they’ve purchased, or they “don’t get the people piece right”.

“If you’re buying a pharmaceuticals company because they have a good R&D team and you change their culture, they could then leave to a competitor and half your team is gone, which may be the reason you bought it in the first place,” he gives as an example.

Other stakeholders are the customers of both businesses. The acquiring business needs to understand that if they change things, they may also be changing the relationship between the acquired business and its customers. If you’re acquiring a business to gain market share, this is a crucial consideration.

“A lot of people don’t think of how their customers might react. You have to think of why people are customers of that particular company. You need to maintain the link between that service and the customers; if you lose that, you’re in real trouble,” Brewis-Weston remarks.

With our domestic market necessarily limited by population and geography, taking your franchise global is a very attractive step. As franchise expert David Stafford of DC Strategy comments: “Australia represents less than two percent of world GDP [gross domestic product], so there is more opportunity in the rest of the world than there is here for most businesses. And with the economic downturn, there are some really good opportunities at the moment.”

Adding to the attraction, Australian franchises are highly regarded internationally. For instance, each year the Franchising and Licensing Association in Singapore invites a single nomination from each of the 36 member countries of the World Franchise Council, for recognition in the International Franchise of the Year awards, held in Singapore.

In 2008, it was an Australian franchise, freight and logistics company Pack & Send, which was named runner-up to the winning Chinese company, Inner Mongolia Little-Sheep Catering Chain. Being considered the second-best franchise in the world was an enormous boost for the company, which has 92 stores across Australia, in the United Kingdom and New Zealand.

Taking your franchise global brings with it the possibility of great reward and financial success, but it also brings a fresh raft of challenges. Happily, most of these can be avoided with research, preparation and the right advice.

Primarily, it’s important not to go too early and risk taking an immature business global. Significant expansion cannot be expected unless the fundamentals are well and truly in place. With 85 percent of businesses that try to go international failing to reach their development objectives, it’s critical your strategy be a sound one, from day one.

5 mistakes franchises make

1. Trying to expand an immature business

There are three basic non-negotiable conditions that must be in place before you even entertain the thought of going global.

• Strong cash flow and capital base, and profitability.
• Strong market position, meaning a solid proportion of domestic growth has been already achieved. This demonstrates also that your business systems and processes are in place and no longer need to be subject to refinement.
• The business must have the requisite senior management resources that can be taken from the Australian business and devoted to expansion in the foreign market.

“Unless those three conditions are met, most people struggle. And struggle badly,” says Stafford. “Traditionally what happens is an email arrives from a fan, who says ‘saw your brand, really liked it, it belongs in my country, I’m really good at what I do, why don’t you come here?’ And this deal fever erupts and all of a sudden you’re letting a stranger dictate your international expansion strategy.”

Usually in these cases, the business gets established in the marketplace but stagnates as there is no system or plan for growth.

2. Selecting the wrong business model

Sometimes business owners don’t really understand what the most appropriate business model is, be it a franchise model or other structure. Deciding what roles and responsibilities each party will have in the business model is critical, as is understanding and communicating who is going to do what.

3. Selecting the wrong country

Due diligence cannot be underestimated in choosing your overseas market. “Most people do this poorly,” says Stafford. “They make a decision on the basis that they know a little bit about that market or they went there on holiday—those sorts of subjective reasons—when really the decisions need to be based in some good solid robust research.”

4. Having inappropriate cultural assumptions

Just because things are done a certain way in the originating country, doesn’t mean that it’s done that way everywhere else in the world. It’s important to do your research and make sure your business fits with the cultural environment.

One example is McDonald’s in India. Whereas elsewhere in the world, McDonald’s is famous for its beef hamburgers, in India, beef isn’t compatible with the predominantly Hindu local culture. So, with this awareness in mind, McDonald’s built a sizable business around alternative products such as the Maharajah Mac, a chicken burger.

“You have to understand the local nuances,” explains Stafford. “And some of them can be really big. It can be the difference between success and failure; and some of them can be quite minor, such as how you write your operations manual, or telling the time.”

A common result of understanding cultural differences and local nuances can be that the brand name or logo needs to change. Says Stafford: “It happens more than you would think. There’s a very big brand baby food company out of America, called Gerber, but when it was released into France, the brand had to change as the French word gerber means ‘to puke’.”

5. Not having a big enough capital base

Having enough cash to back the move overseas is understandably a necessary element. Consultation with finance experts is a must to ensure sufficient financial depth to support the expansion. This is important also considering you might enter some markets as a franchise but use alternate structures in others. A sizeable number of franchisers in Australia would have a reasonable percentage of company-owned stores, whereas this may not be the case when they enter a foreign market.

To maximise your export opportunity and increase your chances of success, it’s important to focus on what you want to achieve. That way, you’ll have a clear vision to plan for and work towards. So, where to begin? Use these three steps to ensure you are export ready.

Step 1: Discover everything you can

Start by investing time in researching how other businesses have set about exporting their product. Use the internet to find case studies on your intended market, as well as other industries, and learn from their achievements and mistakes.

You should also extensively research your competition to understand their offering and work out how you differ to what they provide. Once you know, you will be in a better position to market your company’s unique proposition to foreign buyers so that they snap up your product ahead of the field.

Another useful and accessible way to build up your exporting knowledge is to attend seminars and enrol in short courses on the export marketing process, export documentation and international business. In this environment, you will also meet like minded people who have good ideas and advice for you to learn from.

If you prefer to have experts on your side, seek out an export specialist to guide you along the journey and fast track the process. They should be able to help you carry out important market research and feasibility studies to minimise costs, associated risks and help you to connect with your target market.

Step 2: Plan your exporting

With research underway, it’s also the right time to develop an effective action plan based on what you are learning. The world’s most successful exporters always have an export plan in place. So, increase your chances of becoming one of them by carefully developing a plan with your specialist guide and following it.

Ideally, you will gain experience in marketing your product through first becoming established in your local market. That way, you can parlay your learnings into your export plan. And remember to factor in the extra costs involved in exporting your product, like additional transport, insurance premiums, handling charges, and changes to packaging and labelling for a foreign audience.

Step 3: Set up your business for exporting

It’s all very well to have a plan but you also literally need to have the goods to back it up. So, make sure that you are equipped to deliver what you say you can, when you say you will. Make sure you have sound processes in place to support you in satisfying demand and fulfilling orders. After all, you want your product to sell like hotcakes, so put time into creating your systems and processes that won’t let your customers, and you, down.

You should also have your basic promotional collateral ready to go, like business cards, a website and a company profile, when you start your export marketing drive. This is so you start off your campaign at full force and with the kind of professionalism your foreign buyers will expect from you.

While your offer may come natural and straightforward for you, on the flipside, creating a deliberate and engineered export strategy will see results come from your diligence and hard work rather than from luck.

—Steve Dowling is founder and director of ClientLink (www.clientlink.com.au), a boutique consultancy specialising in helping small to medium businesses achieve success in marketing and export planning.

Research your market

I cannot stress enough how important it is for businesses to do background research into the market they are entering. Every country and every city has their own set of rules and regulations.

Understand the competitive environment of the market within your industry. Think about what cultural and political elements might affect your business success. It sounds logical and common sense, but in my experience of helping Australian businesses expand internationally, this is the most common mistake.

Exporters should take the time to discover the finer details in their chosen market. Tax, labour, and trade regulations can present nasty surprises.

On the other hand, many cities and countries offer worthwhile incentives and tax benefits for businesses. Knowing about the incentives could help you choose the right market and right conditions to give your new business a high chance of success.

For example, many Middle Eastern countries have ‘Free Zones’, which make it easy to set up your business, bypassing the local incorporation and trade licence requirements.

Things that you should think about in the business environment include:

• Business arrangements: what is required to start up, what company structure arrangement choices you have to have.
• Tax system benefits
• Labour laws and regulation
• Local hiring requirements

Government agencies like Austrade, business associations and chambers of commerce all able to provide sound advice for businesses looking to expand. When looking for office facilities, make sure you look at what technology services are available to you. IT support will be a crucial factor in business success abroad.

Conflict

Avoid getting into a dispute to begin with by contracting clearly, equitably and unambiguously, getting legal advice early and conducting due diligence. “That’s the first thing anyone can do to protect themselves. Due diligence can be done through Austrade offices overseas, and with the assistance of your accountant and law firms here and overseas,” explains Andrew Hudson, partner at law firm Hunt & Hunt.

“You will need to ensure that they can provide assistance here and overseas in the jurisdiction in which you are going to trade. Local information is vital.”

Ask for legal, commercial and financial references, make sure you check them and keep accurate documentation of your due diligence process. “I often hear, ‘I found them on the internet so they should be all right’. People can’t be bothered with due diligence and it’s always those ones who are back within a week saying they have a problem,” says Hudson.

Careful contracting

When contracting, ensure the agreement is properly drafted in English and legally effective. You can have versions in English and in another language, but the agreement must reflect that the English version takes precedence.  Performance reviews should also be stated, accompanied by clear benchmarks.

Don’t forget to be explicit regarding intellectual property (IP). “Regarding intellectual property, the most important thing you can do is ensure you’ve registered your IP in all the relevant jurisdictions. This gives you a better ability to enforce your rights,” says Hudson.

Also ensure the agreement includes a proper dispute resolution clause covering cost, jurisdiction and enforcement.

“One popular option is a cascade process based on alternative dispute resolution given that there can be difficulties in using court systems overseas,” says Hudson. “In the event of a dispute, the first step is to have nominated representatives meet to negotiate in good faith. Should that fail, the parties have mediation, and failing that, they then, perhaps with the ICC rules. If no success with mediation, then they have arbitration to an agreed set of rules.

“Parties can elect to adopt the rules set to resolve disputes by the International Chamber of Commerce, the United Nations or , for instancethose of the Australian Commercial Disputes Centre for Dispute Resolution. However, before proceeding it is important to understanding  the content of the which arbitration rules you are to adopt willing to submit to is critical as well; don’t just rely on the ‘brand’, actually check the rules before referencing them in the agreement.”

He adds: “You also need to reserve your right to urgent interlocutory action, for instance, to get an urgent court order to stop the other party behaving badly by breaching non –- competition, or confidentiality obligations or your IP rights.”

Make sure the governing law is Australian and the governing language is English for dispute resolution, even if you’re arguing the dispute overseas. Also, if you have to go to mediation or arbitration, “you’d like to make sure that it is accordance with Australian jurisdiction ideally. Or Singapore, Hong Kong or London,” he suggests.

Be aware that if you are selling particular commodities, they may already be governed by standard forms of agreement and arbitration. For instance if you sell grain, there are grain trader forms and processes already in place.

There are potentially tens of thousands of small businesses with a product or service capable of export that are not exporting and should consider exporting. In reviewing whether your business is ready to begin exporting, you should consider a number of important factors. One important factor is to assess whether you are in the financial position to actually pursue an export strategy.

Assessing your financial position
Assessing your financial position requires you to prepare and interpret financial statements—profit and loss, balance sheet and cash flow statements—and budgets, including cash flow forecasts. These base documents will allow you to assess your current financial position as well as your projected future financial position, with and without exporting. If you don’t already prepare and interpret such documents, your accountant will be able to help.

Knowing your financial position is vitally important before you put together an export plan. Your financial position will determine how much effort you can put into exporting, whether you need to move resources from another area, or seek additional finance. While your financial position should not dictate your plan for becoming export ready, it should be a vital consideration to assess the resources, time, skills and commitment you can devote to building an export market over a sustained period, typically between 12 to 18 months.

Export plan
After you have matched your exporting ambitions with the reality of your financial position, you need to develop an export plan as part of your overall business plan. The export plan should also set objectives against which you can measure performance.

The first step is to conduct market research on your current target export markets. Research will vary in cost, time and complexity, depending on the product or service, the customers’ needs, the country and the information and experience already available to you. Although you can do much of this research in Australia, you will still need to visit the market itself. Once you start to visit these markets, the costs will begin to rise as you confirm and fine-tune your research—one visit is never enough.

Cost of preparation
In preparing to become export ready, there are a number of other potential outgoings for which you will need to budget. These include the cost of participating in trade events, developing promotional material for different markets, developing a corporate and product profile, interpreting and translating services, product customisation, due diligence on potential partners, legal fees and so on.

It is important that your financial projections reflect the full cost of establishing and operating in a market, including your time and your employees’ time, so you can make an informed decision about cost.

Distribution channels
Once you have identified a target market, you need to consider how best to get your product or service into that market. Distribution channels include direct sales, licensing, agents, distributors, and so forth. Each of these distribution channels has different costs, benefits and risks attached to them, therefore as part of identifying the preferred distribution channel, you should do a cost-benefit analysis of the various options.

If you decide to work with a partner, part of your due diligence should include reviewing whether the potential partner has the resources to perform the tasks that you require.

Pricing
It is important to determine what price to charge for your product or service in a new market. The cost to you of getting the product to market, including the cost of any modifications, and the margin you want to achieve are not the only pricing considerations, but they will be the most significant considerations over the medium to long term.

While introductory prices are a tool to create interest and to build market share, you should test how successful your product or service will be if it priced appropriately, as this will be the price that you will want to sell at over the long run. Pricing should also take into account the risks of currency fluctuation, commissions and retainers payable to an agent and transportation cost.

You should also forecast your sales volume for given prices.

Before finalising your price, put your preferred price to whomever you are selling to and be prepared to bargain; do not simply chase any sale, chase profitable sales. Be careful not to be locked into selling at a fixed price as this transfers all the risk to you; make sure that you have the ability to pass cost fluctuations.