Posted: Tue 7th Dec 2021
You’ve had this brilliant idea to expand your business through exporting and are now looking at a map of the world thinking, “Where do I start?”.
In my 30 years of working in international trade, I’ve found this question is perhaps the hardest one to answer. A world of opportunities awaits your product or service, but knowing where to begin with your exporting can be the key to whether or not you succeed.
So, how will you define your strategy? Read on to learn which steps you should be taking on the road to exporting.
At Go Exporting, we always stress to our clients the importance of assessing all the key elements involved, from market size to barriers to entry and risk.
By taking the time to step back, analyse and define your export strategy, you reduce the chances of making mistakes, and increase the odds that your first foray into international territories will be a success.
Before anything else, you need to be clear why you want to export and whether your organisation is ready for the challenge. Look at the following:
Your motivations to export: Is it a key part of your growth strategy or just something you think you should be doing?
What you’re aiming to achieve, over what period: Have a clear idea where you would like to be in the coming months and years.
Your attitude to risk: You need to bring this into line with the additional risk that exporting exposes you to.
The resources you can allocate to export, and the timeframe: Are you able to focus on exporting? Or are you fully occupied with making the most of your business’s potential in your local territory?
Your organisation’s readiness: Is everyone on board? Are your products/services ready? Are you and your team prepared if an export order comes in tomorrow?
Will exporting affect your current business? You should be exporting alongside your normal operations. If exporting will be detrimental in any way, you must carefully assess the risks against the rewards.
It’s important to examine all of the above factors if you’re to know for certain that exporting is a suitable next move.
You’ve decided that exporting is right for you at this time, so where do you start? How do you identify and assess the best markets? Here are some things to consider.
Assessing your in-house data: Where have you already gained customers or enquiries? Are there markets which stand out and show the greatest opportunity as a result?
Learning from your competitors: Where do they sell, where do they have a distributor or sales team, and so on? This can be a sure sign of market potential.
Market research: Learn as much as you can about the market, its size, growth rate, trends etc. You can find a lot of information online, through trade associations, trade magazines and so on. Or use a specialist company to do the research for you.
Having accurate information can save you money, as it allows you to make the right decisions and avoid the wrong ones!
Barriers to entry: Being aware of all barriers to entry in a particular market, and assessing their impact, is crucial. Barriers can include:
the need for approvals or certifications
different languages and/or currencies
Risks: Are there any country-specific risks (such as political stability) you need to think about?
Evaluating the market potential: Take each element and give it a score. This will help build an overall rating for the country and allow you to compare various countries’ potential, so you know where to focus.
Be methodical. Assess each of the above factors to rate the different potential markets and decide on your key priorities. Let the head rule the heart in this case.
You now have your target market(s). The next vital step is deciding how you’re going to reach the market and carve out a share of the business?
How many markets? Decide what number of market(s) your organisation is ready to enter at the same time. Match your resources to your ambition.
Where to focus: Avoid stretching too thinly. Take the time to gain a deeper understanding of the market and show potential customers you’re committed to their country.
Route to market: There are many options – distributor, agent, recruitment, direct, online and so on. Choose which is best for your business by understanding the differences, the positives and negatives of each one.
The decision isn’t always clear and is one to make carefully. Is the best option to work with a local distributor or agent? This is a low-risk strategy on the face of it, with little fixed cost, but to offset that is the risk of lower returns.
Choose carefully: Once you’ve decided on your best route to market, pick your partners, employees or online portals with care. The wrong selection now could set you back months or even years. For example, you should see a distributor as your biggest customer and treat them as such.
Whatever the choice, once you’ve decided, don’t waver. Focus on it. Find the best distributor, agent or employee, whichever you’ve chosen. Be patient – you don’t need to take the first thing you’re offered.
Look around. Ask a lot of questions. Seek advice from people you trust within the market and within your company. Take the time to make the right decision, as it could be the deciding factor in your exporting success.
At this stage of the process, it’s time to pull everything together into a detailed plan. Define all the key elements and the objectives, including the following:
The financial investment needed: Be certain that the amount you’re required to invest is something you can both afford and justify. Will the returns exceed the costs?
The non-financial resources needed: Do you have the people, the time, the right skills in place?
Timescale: How long are you prepared to invest? How soon do you need export to be self-financing?
Level of risk: Assess the risks you’re exposed to and compare them to your attitude towards risk. Do they match? Do the potential returns warrant the exposure and the risk?
Route-to-market strategy: One of the key decisions is how you’ll enter the market. Make the right choice and focus on it.
Milestones along the way: Consider what you need to achieve, by when, to be successful.
Expected outcomes: What progress do you want to have made after three, six, 12 months? Two years? Three years?
Make sure you’re comfortable with the plan and the detail, with each of the elements above. Discuss with the relevant people involved to make sure everyone is on the same page. Getting colleagues to buy in to your strategy now will save a lot of questions later.
Regularly review your plan and compare it to your actual results. Measure if you’ve successfully passed your milestones and achieved the outcomes you expected. Highlight any anomalies and work to put them right. Be vigilant in keeping the plan on track.
If it’s working, great. If not, feel free to question everything. Are you delivering the resources and investment agreed in the plan? Is the plan itself wrong, or the manner in which you’re executing it? Don’t be afraid to change tack if you need to, but be sure of the reasons first.
Need a little help navigating the updates in UK imports and exports? Join the #FutureofCustoms webinar series, where Deloitte customs specialists explore the ins and outs of trade and up-and-coming solutions for businesses like yours.
Support and information on importing and exporting, provided by Enterprise Nation in collaboration with Deloitte.