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Five steps to export readiness

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"Take advantage of opportunities but be less opportunistic," says Anthony Moss, director of export specialists Incite Management Group. He says that for many businesses the move into export is born out of opportunism: answering an unsolicited email or cold call from an overseas buyer. The limits of the Australian market often tempt business owners to take up the opportunity and they begin exporting without taking time for preparation. But if the move doesn’t fit into a company’s overall growth strategy, the venture could fail, Moss says.

Planning in advance

Start research and planning long before the first container leaves Australian waters, and an exporting venture is far more likely to succeed. "You need to go through the planning exercise to determine what markets [to enter], what unique selling points [you have], what your market entry strategy is and the implications of that financially: the deflection of resources, time and energy," Moss says. When approached by a client eager to export, an Incite strategist will first ask why they want to export. They need to know the export venture is part of a clear, focused business strategy. "If you’ve already done the planning exercise, then it’s remarkably positive and hugely rewarding to launch into export markets," Moss says.

Picking your market

Moss will always recommend that a business should export to New Zealand first, as a test market. "It’s a safe local, relatively small market, but it exposes them as an organisation to all of the issues that they will face when approaching other export markets. These are: time zone, currency and regulatory differences, communications and, to a certain degree, culture," he says. If the test is successful and the company demonstrates they have the infrastructure to support an export program, the next step is to identify target markets. While many Australian businesses approach English-speaking markets-the United States and the United Kingdom-they are not necessarily the best markets for Australian product. Moss suggests you consider more than common language when choosing markets and instead assess the appropriateness of your product or service to your target. Exportise advisor Gary Cronin recommends that after identifying a market you seek a suitable local partner. "It could be a distributor, a company who is already distributing a similar product, someone who will help you find distributors or someone you can license intellectual property to. That partner becomes quite important to assist you in the market you’re targeting." Austrade should be the first point of contact, Cronin advises, as they can assist with initial market research and introduce you to potential partners. Asia and the Middle East have proved successful markets for Australian products and services but in these markets the nature of your product or service is secondary to your ability to form business relationships, Moss says.

"In other markets, such as Europe or North America, the business proposition itself can make a product perform or fail, but in Asia and the Middle East particularly it is very often the relationship you have with a support partner that determines your success or otherwise. Those markets are dependent on relationship marketing." While cracking the US market can be extremely lucrative, it is very challenging, according to Moss. It should be treated as a continental economy, with five different regional markets (Northern, Southern, Midwest, East Coast and West Coast) and it is better to have several regional partners than a national distributor. In contrast, the United Kingdom is a single market with a good logistics system, easily supported by one distribution partner, he says.

Ensuring profitability

Do market research for each new market. Cronin advises new exporters to identify what the competition is, the pricing structure, cultural issues and the options for methods of delivery. Research the tariffs, customs requirements and regulatory controls around your product or service. Most of that can be done from your desk, using the resources of Austrade, state trade organisations or private export specialists. Exporting to some countries simply will not be a profitable exercise. Cronin emphasises that businesses need to look at hidden costs. "Look at what the freight cost might be and what duties you might have international markets. There can be specific requirements for different industries, where you may need a license to export from Australia or approval of your product for export." He warns exporters to consider the impact on their own business. "As a rule of thumb, it probably takes twice as long as people anticipate to become successful in the export market and as a result it costs twice as much. Both financial and management resources need to be available, to enter the export market." Cronin also reminds exporters to protect their intellectual property. This can mean registering trademarks or patents in each country, which is a costly but vital exercise, especially in the markets of Asia and South America where copies can be produced very quickly.

Pitching your product

Once you have built up a successful following in your local market it can be easy to stop thinking about your unique selling proposition (USP). In export your USP needs to be clearly defined. It doesn’t need to be around the product or service itself, Moss says, but may be a unique offering in your method of delivery and marketing. Export will not only grow your business, but refine your offerings in the local market. "By taking your products overseas you expose yourself to international competition. That means you need to be a little bit sharper, a little bit faster, a little bit better," Moss says. Be prepared to change your product, presentation, service delivery or method of delivery and after sales service in the interests of differentiation. Use web marketing to focus on early adopters in your target market, Moss suggests. "Then, you need to broaden that marketing strategy around your goals for your business and what you feel is the potential market penetration that can you achieve. Then you can determine the appropriate spend to get that return."

Budget for marketing spend from the beginning, as your point of difference is only as good as your ability to communicate it. "Marketing is an investment," Moss says. "It is a cost but it’s an investment. It’s designed to generate a return."

Establishing distribution

Start small and be prepared for your exporting business to grow. Look at your distribution channels, preferred method to market and the partners that you might establish a relationship with. "The entry strategy that you might have initially is not the market entry strategy that you ultimately want to get to," Moss says. "So if you’re selling a product to retail it could initially be a direct-to-retail sale. Then you might have a direct-to-retail sale supported by a local distributor. Which then could be a direct-to-retail sale supported by local distributors and the development of a [network] of distributors beyond particular regions. Ultimately you might set up your own marketing and sales office and your own distribution facilities." Your methods of distribution will change depending on your ability to invest and the level of market penetration that investment achieves. As returns grow, distribution can become more cost effective. Small enterprises can also consider licensing and joint ventures to take advantage of established distribution networks in the destination country.

Conclusion

Set goals but be prepared to wait. "It is very difficult for an SME to think about getting total market penetration in a very short period of time," Moss says. "Export is the story of years and years and years before becoming an overnight success."

Getting Help

The Export Market Development Grant Administered by Austrade, the Export Market Development Grant (EMDG) helps businesses recover some of the cost of marketing. The EMDG is an open access program, offering a rebate of up to $150,000 to exporters. After a threshold of $10,000 they get $1 back for every $2 spent. Eligible expenses for claim may include: Overseas travel Marketing materials (including website development) Advertising Product samples Trade events Cost of a local representative or consultant Bringing overseas buyers to Australia International patents and trademarks Copyright. Gary Cronin, Exportise

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