Exporting can be a profitable way of expanding your business, spreading your risks and reducing your dependence on the local market. Research shows that, on average, exporting companies are more profitable than their non-exporting counterparts.
Exporting exposes you to new ideas, management practices, marketing techniques, and ways of competing that you wouldn’t have experienced by staying at home. All this considerably improves your ability to compete in the domestic market as well.
By going overseas, you can become more efficient and increase your productivity. Exporting companies have better growth prospects, highly skilled, highly productive staff and tend to adapt technology and best practice techniques faster.
Even if you have a limited domestic market, you should think about exporting – around a quarter of new exporters are born globals.
Global brands can be built from small local companies.
Planning For Export Success
Successful export planning requires a broad consensus and long-term commitment among key management on company goals, objectives, capabilities, and constraints, as well as time and money. Businesses must also have realistic expectations for return on investment, lay the groundwork for creating an export plan, and be prepared to modify products and services for different markets.
Export Plan Basics
One key element of becoming export ready is to develop an export plan. So once you’ve decided to sell your products abroad, get ready to do the initial work of deciding how you want to develop and grow your international sales. Doing so increases your chances that the best options will be chosen, resources will be used wisely, and execution will lead to a successful result.
The purpose of an export plan is to assemble facts, constraints, and goals; and to create an action statement that takes all of those elements into account. The plan includes specific objectives, sets forth time schedules for implementation, and marks milestones so that the degree of success can be measured and can motivate personnel.
Below are 11 questions you should answer in developing an export plan:
- Which products are selected for export development, and what modifications, if any, must be made to adapt them for overseas markets?
- Is an export license needed?
- Which countries are targeted for sales development?
- In each country, what are the basic customer profiles, and what marketing and distribution channels should be used to reach customers?
- What special challenges pertain to each market (for example, competition, cultural differences, and import and export controls), and what is the strategy to address them?
- How will your product’s export sales price be determined?
- What specific operational steps must be taken and when?
- What will be the time frame for implementing each element of the plan?
- What personnel and company resources will be dedicated to exporting?
- What will be the cost in time and money for each element?
- How will results be evaluated and used to modify the plan?
Export Plan Tips
- The first time an export plan is developed, it should be kept simple. It need be only a few pages long because important market data and planning elements may not yet be available. The initial planning effort itself gradually generates more information and insight. As you learn more about exporting and your company’s competitive position, the export plan will become more detailed and complete.
- Your plan should be written and viewed as a flexible management tool, not as a static document. Objectives in the plan should be compared with actual results to measure the success of different strategies. Don’t hesitate to modify the plan and make it more specific as new information and experience are gained.
- A detailed plan is recommended for companies that intend to export directly, meaning selling to an end-user in another country. If your company chooses indirect export methods or sells via your or a third party’s website, you may use much simpler plans.
The Value of a Plan
- Written plans give you a clear understanding of specific steps that need to be taken and help assure a commitment to exporting over the longer term.
- Only about a third of SME U.S. manufacturers have a written plan of any size or kind. Absent a plan, your business may overlook much better opportunities. In addition, reactive exporters may quickly give up on selling to international customers, concluding prematurely that it’s not worth the effort or that it’s easier to serve customers closer to home even if that base may not grow, and could very well shrink, in the future.
- Remember that while 59 percent of all U.S. exporters export to only a single market (predominantly Canada), many small exporters sell to more countries than they have employees, and these sales account for a growing percentage of total sales. These mini-multinationals are becoming more common, and your company can be one of them.
Length of the Plan
Your plan need only be a few pages to start. Here are some important preliminary questions to ask and the answers will become an important part of the plan.
Product or Service
- What need does my product or service fill in the global marketplace?
- What modifications, if any, must be made to adapt my product for the overseas market?
- Do I need special licenses or certificates from my or the buyer’s government?
- Do I need to modify my packaging or labeling?
- How much will it cost to get my product to market (freight, duties, taxes and other costs)?
- Given an estimate of the costs of getting my product to the buyer, what is my pricing strategy?
- What, if anything, do I need to protect my intellectual property?
- What modifications, if any, should I make to my website to make it easy for potential buyers to understand the value of my product or service, to contact me, and to make a purchase?
- Should I sell my products on third party e-commerce platforms?
- What kinds of social media should I use to build awareness?
- Should I attend a trade show where international buyers are present?
- What are the reasons for pursuing export markets? Are they solid objectives (such as increasing sales volume or developing a broader, more stable customer base), or are they frivolous (for example, the owner wants an excuse to travel)?
- How committed is top management to an export effort? Is exporting viewed as a quick fix for slumping domestic sales? Will export customers be neglected if domestic sales pick up?
- What are management’s expectations? How quickly does management expect export operations to become self-sustaining? What level of return on investment is expected?
- With what countries has business already been conducted, or from what countries have inquiries already been received?
- Which product lines are talked about the most?
- Are any domestic customers buying the product for sale or shipment overseas? If so, to which countries?
- Is the trend of sales and inquiries up or down?
- Who are the main domestic and foreign competitors?
- What general and specific lessons have been learned from past export attempts or experiences?
Management and Personnel
- What in-house international expertise does the company have (for example, international sales experience and language capabilities)?
- Who will be responsible for the export department’s organization and staff?
- How much senior management time should be allocated and could be allocated?
- What organizational structure is required to ensure that export sales are adequately serviced?
- Who will follow through after the planning has been done?
- How is the present capacity being used?
- Will filling export orders hurt domestic sales?
- What will be the cost of additional production?
- Are there fluctuations in the annual workload? When? Why?
- What minimum-order quantity is required?
- What would be required to design and package products specifically for export?
- What amount of capital can be committed to export production and marketing?
- What level of operating costs can be supported by the export department?
- How are the initial expenses of export efforts to be allocated?
- What other new development plans in the works might compete with export plans?
- By what date must an export effort pay for itself?
- Do you qualify for export financing from government or commercial sources?