Developing business in overseas markets can be a significantly rewarding exercise-particularly for medium and small sized businesses. For most businesses the size of overseas markets is staggering in comparison to the total market size of domestic markets. The following are just some of the benefits of exporting: Access to much larger markets-securing a very small share can be significant for an Australian based SMB. Depending upon your export strategy you may have access to overseas capital to fund your business growth. For manufactured goods, in addition to the benefits of greater volume exporting to the ‘other’ hemisphere can greatly assist to smooth out the normal peaks and troughs of supplying the domestic market. There maybe ‘residual markets’ overseas for products and services that are in decline in the domestic market. The mere process of overcoming the numerous hurdles of exporting can sharpen your commercial acumen and improve your business’ sustainability.
Maximise exporting benefits
Your domestic business operations can also derive significant benefit from developing overseas markets as follows: Exposing your products/services to overseas competition forces you to compare your product offering and in so doing you may enhance your product or service to be more competitive. This can assist your competitive edge in your domestic market by either increasing market-share or improving margin-or in preventing overseas competitors competing in your market. As your product may need to be enhanced to market overseas-so may your marketing message and materials. Is the value proposition you offer your customers really crisp, clear and differentiating? Different markets require information presented in different ways (in addition to using new languages). The information gained this way can provide a reach stream of innovative introductions into your domestic market. The obvious benefit to manufacturers is larger production runs and hopefully the benefit of economies of scale. To successfully access export markets may require changes to internal systems and processes-all of which can/should be used to enhance service delivery in the domestic market. Typically expanding into export markets requires bringing additional skills into the business and this can be achieved through training-hiring qualified staff or outsourcing support
Are you export ready?
Notwithstanding the above developing overseas markets is not for the fainthearted-penetrating new markets with different languages, cultures and currencies requires time, skills, concerted effort and cash (working capital). If done incorrectly chasing export markets can potentially negatively impact the domestic business. The first step is to evaluate your readiness for export. To address this question you must answer the questions: Do we have or can get access to appropriate skills? Do we have the capacity now (product or service delivery) to service export markets? Is that capacity scalable, what are the limitations? Will developing export markets draw resources-skills, money, capacity? Typically export markets involve a longer payment cycle and a reduced margin plus volumes can be significant. Can your business fund this additional working capital or can it source the appropriate funds? Have you researched target markets in depth and been able to identify how the value proposition of your product or service differs from local and other international competition? If you cannot answer all these questions seek independent advice to assist you to secure the information you need and if necessary to assist you to become export ready. Develop your strategy and set objectives Once you are confident you are Export Ready it is time to develop your plan. Your Export Plan must start with the clarification of your strategy. To develop your export strategy you must be able to answer the following questions: 1. Why do you wish to export? 2. What benefits your business will derive from penetrating export markets? 3. How will those benefits impact your domestic business? Answering these three key questions will ensure that your strategy is clear and this will therefore will be an important framework within which to manage the development of your export business. In addition to answering the three questions above your strategy should also identify: The markets you will target The product-service areas that you will compete in How your product/service will be ‘delivered’ e.g. shipped from domestic operations, manufactured offshore, licensed, franchised, delivered online etc.
Your picture of export success
Confirming your strategy will require analysis and evaluation based upon your desired objectives and the resources at your disposal. It is advisable to seek assistance to either assist you to develop or, to review the strategy you develop. Once the strategy has been developed it is important to complete your export plan. For more information see www.incitemg.com.au -Anthony Moss, director of Incite Management Group, has more than 24 years' international experience at senior management level in manufacturing, wholesale and service industries in the UK, Europe and the US.