Is your business export ready?

Is your company looking to enter the export market? Perhaps you’ve reached a particular stage in your growth and exporting is the next logical step toward development and increasing profits. Perhaps the occasional order from other countries has unintentionally expanded into something bigger and your company now needs to formalise the “export” arrangement, making it part of the business plan.

Early attempts to export may fail when companies do not have adequate information or resources and underestimate what is required to export successfully. Small and medium-sized businesses tend to have little margin for error. Expansion into new markets before you are prepared is likely to damage your business, costing money and time and causing losses in opportunity and reputation. It is therefore important, before setting out on the exporting venture, to consider a range of crucial factors that will impact the export readiness of your company. We’ll list and discuss these below, providing some questions for consideration that will give you an indication of your company’s export readiness.

Time allocation

Exporting requires time, particularly in the early market development stages.

  • Is your staff already thinly stretched managing the domestic business? If so, it will be challenging to commit to a new and major venture, such as exporting.

Financial resources and budget

Exporting requires extra finances, over and above what is necessary to service your domestic market. You will need to spend money on foreign market development before sales come in, resulting in a time lag between your initial product promotion overseas and finally receiving the first order. Potentially, the first orders may provide little to no profit. At some point, you may require bridging finance to meet production requirements on orders.

  • Is your business struggling with cash flow to keep the domestic enterprise going? If so, finding the resources to start exporting may be challenging.
  • Does your business have a sufficient buffer to accommodate the likely time lag?
  • Do you have access to bridging finance?
  • Do you have the documentation these providers may require, e.g., financials, and business plans?

Your budget will be affected by your product and the potential overseas market.

  • Do you need to improve your product?
  • Do you need to introduce a quality management system to meet different overseas standards (e.g., ISO 9000)?
  • Have you identified potential buyers?

Do you need to market your product to a specific group?

Have a question?

Get in touch

International business experience and/or management skills

There are many differences between doing business internationally or locally, e.g., different languages, business customs, laws, culture, user needs or preferences, packaging and labelling regulations, competitors, product standards, health and safety regulations, and paperwork, to list a few. Further differences include how one develops the export market, ensures payment, processes export orders, and handles the varied risks.

  • Do you have someone in your company, or access to someone, with export business experience and skills who can navigate the complexities and many extra issues that arise relating to exports that arise? (Outside expertise is beneficial, but ideally, someone within your business must drive the export development).

International marketing intelligence

Linked to the above point, to select the appropriate target markets and launch a market development process, it is imperative to have some knowledge about the international market your company wishes to enter, and whether your product will be able to compete.

  • Do you have up-to-date information about your potential overseas competitors, their products/services and prices?
  • Do you know what the size of the world market for your product is?
  • Do you know anything about potential buyers for your product/service?

Clear export objectives

Without clear export objectives, you will waste resources and be guessing at success.

  • Do you have clear export goals?

Sufficient production and storage capacity

Entering and developing new markets must only be taken on if your company can meet the needs it creates. The costs associated with halting the operation due to lack of capacity are too high otherwise.

  • Will your company be able to manufacture enough products if large orders are placed?
  • Do you have/can you find and finance sufficient storage space for your local and export markets (both for additional materials coming in for production and additional goods awaiting shipment)?
  • Can you manufacture enough to warrant the transport costs and logistics of selling on the foreign market? (Selling small amounts locally may make business sense, but not so in exports when one considers the costs that will be incurred).

Consistent and acceptable quality

As with your local buyer, the international buyer will want to be certain to get the same quality of product each time.

  • Do you have a quality management system in place?
  • Does your company monitor production processes carefully?
  • Does your company keep accurate records?

Administrative/office systems and equipment

When one commits to exporting, one commits to an increased administrative load.

  • Is your company currently managing all its administrative business details? If not, it is unlikely to be ready to embark on exporting at this stage.
  • Are your administration staff computer literate?
  • Does your company correctly record and audit its financial transactions?
  • Does your company have adequate business systems in place? (e.g., are records filed sensibly? Are important documents easily accessible when required?)

Commitment to export

Given the above considerations, export is not something to take on lightly. It will require commitment. Senior management must be on board, ready to invest what is necessary, such as time, staff, capital, and production capacity.

  • Does management show a clear commitment to the export venture?

Conclusion

The prospect of business growth and bigger profits from entering the export market can be appealing. Before launching an export division, however, it is critical to examine the export readiness of your company carefully. We have provided some key areas to consider. These will help determine whether to start the export journey now, or will highlight areas that need further thought, investigation and preparation first.

If you decide that your company is good-to-go, be sure to register as an exporter and register for any applicable trade agreements.

Find more help with your import logistics, original resources, leading-edge training, and assistance with customs licenses on Trade Logistics.