Creating a business in the United States can be the single most rewarding outcome for any local producer. The potential is huge. The US is the world’s single largest market. Developing a business in the US is the ultimate planning exercise. A common mistake is to assume that the US is one big market. It isn’t. The US comprises thousands of markets in different locations with different regulations and requirements. These markets may differ greatly from one side of the country to the other, and from culture to culture. Working your way through this maze requires insight from people who understand how best to get ahead. Industry and Investment NSW has highly experienced operatives with long-time experience in assisting local companies promote their capabilities in the US. Here are five tips from Industry and Investment NSW to get you started in your US export drive:
Take a hard look at your business capabilities
An essential first step is an honest assessment of your business. Developing export markets takes time: it is not unusual for producers to spend three years of focus, energy and expenses before gaining a first order. So while you are focusing on your export business, you need to ensure your local operations are operating smoothly. Gaining export success can create volatile demand forecasts leading to overstocking or understocking as well as production variations that limit the capacity to complete orders on time. Exporters need to be aware that 'niche' and 'small' in the US is very different to Australia. For example, if you win a contract with a 'boutique' supermarket with 10 stores it might sound very manageable, but it's not unusual for boutique" supermarkets to pull in over $300 000 a week in revenues. Scaling up production quickly to meet increased demand ultimately requires increased investment for additional equipment, inventory, logistics, staff and marketing. Also, exporting adds an extra complexity to normal business cashflow management, particularly when costs outstrip export sales returns.
Export homework should be rigorous. Discovering too late that a successful local brand cannot be used in the US can prove disastrous. You need to understand the business culture you are going to operate in.
The socio-demographics for your product in Australia may well be very different in the US where for millions of people English is a second language. As well as different customers and operating practices, you will face different regulations, taxes and documentation. You will also have different pricing, terms of trade policies and payment schedules. Weather patterns in the US are extreme. Not allowing for extreme heat or cold snaps can ruin delivery schedules. You also need to account for lengthy distances in the supply chain, as well as freight and handling and delivery issues, and volatile market conditions. Service issues need to be taken into account. If your identified US market wants 24/7 service it may difficult to deliver from central NSW. You will need to consider providing simple return policies, delivery guarantees, 1800 type support numbers and web access to ensure you meet minimum US client service expectations.
Identify your competitive advantage
US markets are highly competitive. Buyers are interested in dealing with businesses and suppliers who understand their needs and can deliver on their promises. US buyers are very willing to try competitive goods and services provided they can see the tangible benefits in switching suppliers. Find out what potential customers really want, and what their current supplier is not providing. Create your own advantage. Leveraging domestic success makes sense. It may be that what works well with local customers could also work well with their US counterparts. Solicit some local referrals. Offer potential US customers an opportunity to trial your offering. Create some US references. Importantly, you need plan to introduce new product or service releases into your offering on a regular basis. US consumers and buyers expect to see new items/options or content to keep them engaged with you.
Select an effective sales channel
Employing a sales person or team in the US carries high overheads. Using a channel partner on the other hand, provides less risk and lower entry costs. Their marketplace experience may outway the higher margins and less control over customer relationships. There could be a case for using a combination of the direct sales model and using channel partners: different models for different sectors. A channel partner is well experienced in recruiting and managing resellers and taking new offerings to market quickly. They can also assist with training, installation, and support. Ultimately your decision-making should be based on how well you can best serve your customers.
Review the future
An effective plan is essential for developing a business in the US. The plan should be a living document. It should cover realistic objectives as well as detail on how and when they will be achieved. The plan should include all the traditional components of a business plan: from market overview and assessment, customer and product evaluation, distribution, promotion and cash flow financials. A critical path detailing milestones should be included as well as contingency plans for unforeseen impacts and suggestions on how you will deal with them. It should include detail on how you will measure your success so you can better balance your customer and management needs at home with your export endeavours. Organisations like Industry & Investment NSW can assist you with the development of your export US promotion plan as well as advise you on your eligibility for grants to support for your endeavours. Visit www.business.nsw.gov.au/export-from-nswfor more information.
About Industry & Investment NSW
Industry & Investment NSW is the State Government Department that assists in building a diversified state economy that creates jobs. It aims to attract investment to NSW and support innovative, sustainable and globally competitive industries through strong technical knowledge and scientific capabilities. It does this through effective partnerships with industry sectors and by linking them to the state's knowledge and skills capacity.
G’Day USA Australia Week 2011
G’DAY USA: Australia Week 2011 from January 15 -31, 2011 brings together industry leaders and key influencers in government, business, tourism, academia and the arts to cultivate and enhance the Australia-United States relationship. The event is produced by the Australian Government NSW and other State Governments, as well as private sector sponsors, partners and institutions. Visit www.australia-week.comfor more information.
Key features of G’Day USA
A 14-day program hosted across eight US cities: Los Angeles, San Diego, San Francisco, Sacramento, Denver, Houston, Boston and New York 30+ events will reach targeted audiences through conferences and forums, networking, product sampling and promotions Australian business capabilities will be showcased in the USA, strengthening bilateral collaboration, and realising new business opportunities -Kylie Hargreaves is Executive Director, International Markets & Trade, Industry & Development NSW. ?