Any business can export products or services but the process can be complex and challenging and success is far from guaranteed. Yet, when it is approached with careful deliberation, exporting can be a rewarding growth strategy for any business.
Any business can export products or services but the process can be complex and challenging and success is far from guaranteed. Yet, when it is approached with careful deliberation, exporting can be a rewarding growth strategy for any business. Whether you are a sole trade offering consulting services or manage a 500-person manufacturing facility, exporting offers you opportunities for growth, increased sales and diversified markets. But a marketable product or service is only the beginning. Exporting takes time and effort. It also takes resources and a strong commitment to compete beyond your current borders. If you are focused and committed you must first assess your readiness to enter the global marketplace. Follow our 10 Steps guide to help to achieve success in exporting.
- step 1 Assess Your Export Readiness
The first step is perhaps the most important: assessing your readiness to export. There are certain characteristics that are common, but not necessarily essential to being an export-ready and successful exporter. For example, successful exporters are typically successful domestic sellers, and large enough to have staff, time, and the resources to devote to international travel, marketing, and sales. Typically successful exporters are also able to sustain themselves for a year or more until international sales grow and become profitable.
If you are thinking about exporting your product or service assess your export readiness by completing the Export Readiness Quiz that has been prepared to help exporters assess their strengths, weaknesses, objectives and possible strategies as they explore opportunities in foreign markets.
In addition you should also consider the following;
- Complete a SWOT analysis of your company
- Market Information Readiness: gather market information to ensure you are informed of market and trading conditions in the export target market
- Management Readiness: ensure you and your team are committed and geared to pan and implement the export initiative
- Product Management Readiness: ensure your products and production process are geared to meet the requirements of the target market
- Resource Readiness: ensure your business has access to sufficient resources to support the export initiative
- Transactional Readiness: ensure your business is geared to embark on export sales transactions
- Step 2 Create an Export Plan
The creation of a carefully researched plan is widely considered to be the secret to success in exporting. Your plan should be your source of direction as you embark on your journey into foreign markets helping you to act rather than react to the challenges and risks encountered in international business. Additionally your plan can help you to obtain financial assistance, investors or other strategic partners that may be required to make your export venture a success.
An export plan comprises of many elements such as; a description of your company, its market and industry, and your business objectives; information on your products or services; an analysis of the target market and industry, including trends and forecasts; an examination of the competition and their strengths and weaknesses in contrast to your own; international marketing strategies, including customer profiling and the development of sales and distribution channels; employment and training issues; financial requirements and forecasts; and much more.
- Step 3 Conduct Market Research
Having a deep understanding of your export market will help you make sound export marketing decisions by giving you a clear picture of the economic, political and cultural factors that affect your ability to sell your product or service. Ultimately it will help you to avoid costly mistakes by reducing your exposure to the unknowns. Initial desk-based research will help you to prioritise the most attractive markets through reviewing published trade statistics, market and industry information, potential partners, trade leads and even identify technical barriers such as excessive duties or restrictive practices that may rule out export territories before you start investing serious time and money.
Caribbean Export has developed the Caribbean Export Market Intelligence Portal (CE-MIP) to assist you in your market research. There are a suite or resources out there also for you. Here are a few recommendations; Visit the International Trade Centre (ITC) seven part series of Business Briefings on Technical Barriers to Trade. Additionally direct contact with key experts, customers or other sources of information through techniques such as interviews and consultations should also be done after you have familiarized yourself with the potential market through your desk based research. A market visit will be crucial once you have some understanding of the market dynamics and the opportunity. Your product or service may also be able to take advantage of the Economic Partnership Agreement (EPA) as well as other trade agreements. You may also choose to access a number of Caribbean Exports’ reports and studies. Our comprehensive series of “Doing Business with” Country Reports provides practical advice and guidance on doing business in a number of countries around the world, exploring in detail the local regulatory standards, political influences and cultural challenges. These documents will give you a first-hand understanding of the export markets you are considering to enter.
The Opportunities for Doing Business in the FCORs provide you with valuable information on the market:
- Opportunities for Doing Business between CARIFORUM States and the French Caribbean Outermost Regions (FCORs): Volume 1. Consolidated Report
- Opportunities for doing business between CARIFORUM states and the French Caribbean Outermost Regions (FCORs): Volume 2 – Individual country reports
For those involved in the Services Industries please review:
- Strategic Marketing Plan for the Promotion of Professional Services Exports – Saint Lucia
- Strategic Marketing Plan for the Promotion of Professional Services Exports – Commonwealth of Dominica
- Strategic marketing plan for the promotion of professional services exports – Trinidad and Tobago
- Strategic marketing plan for the promotion of professional services exports – Barbados
For those in the craft sector please review the information in the Export Marketing manual . To help in your research consult the following websites;
- CARICOM Secretariat Statistic department: Provides regional trade statistics.
- Centre for the Promotion of Imports (CBI) : Provides downloadable market studies containing product information, databases and export tools, such as an export readiness checker, templates for developing an export marketing plan and a market research action plan.
- EU Export Help Desk : The EU Export help desk is an online service, provided by the European Commission, to facilitate market access for firms from developing countries to access the European Union. This service provides an overview on the EU´s preferential trade regimes established for developing countries as well as lists all tariffs, taxes and other requirements for developing country exporters interested in supplying the EU market.
- International Trade Centre (ITC): This site contains information on international trade and market profiles, trade statistics and prices.
- TFO Canada: The products and services available to registered users include the handbook on Exporting to Canada as well as over 20 sector-specific market info papers, trade events and news, links to Canadian and international resources; advice on finding buyers, tariff rates, consumer preferences and trends, regulatory requirements and practical tips on preparing for the Canadian market; and free promotion of registered companies and their products.
- HubSpot.com: HubSpot is all-in-one marketing software that helps companies to attract leads and convert them into customers. HubSpot is a pioneer in inbound marketing and aims to help its customers make marketing that people actually love.
- Market Reseach.com : MarketResearch.com is the most comprehensive collection of market intelligence products and services on the Web. They offer reports from over 720 top publishers and update their collection daily to provide firms with instant online access to the worlds most complete and current database of expert insights on global industries, companies, products, and trends.
- Caribbean Regional Organization for Standards & Quality (CROSQ): The CARICOM Regional Organisation for Standards and Quality (CROSQ) is an Inter-Governmental Organisation among the fifteen Member States of the Caribbean Community (CARICOM). It supports the CARICOM mandate in the expansion of intra-regional and extra-regional trade in goods and services. CROSQ is the regional centre for promoting efficiency and competitive production in goods and services, through the process of standardization and the verification of quality. It is mandated to represent the interest of the region in international hemispheric standards work, to promote the harmonization of metrology systems and standards, and to increase the pace of development of regional standards for the sustainable production of goods and services in the CARICOM Single Market and Economy (CSME), and the enhancement of social and economic development.
- Instituto Dominicano Para La Calidad (INDOCAL): is the government office in the Dominican Republic in charge of enforcement of regulations on marking, labeling as well as quality controls.
- Step 4 Create an International Marketing Plan
Marketing for the domestic market can be vastly different from the international market and thus a dedicated International Marketing Plan should be developed to ensure that the needs, tastes and customs of the international audience. Good marketing strategies help the exporter understand and address the potential differences between the domestic and international audiences.
Marketing is a continuous activity and so is marketing planning because you can never know enough about your customers and how to meet their needs. Thus you international marketing plan is a working flexible document that is likely to be reviewed, revised and modified throughout your exporting activities. The basic marketing formula – the four “P’s” of product, price, promotion and place – is just the beginning when it comes to international marketing. Your plan will need to address many other factors, such as;
- payment (international transactions and currency exchanges)
- paperwork (increased documentation)
- practices (different cultural, social and business styles)
- partnerships (strategic alliances to strengthen your market presence)
- protection (increased risks relating to payment, intellectual property or travel)
Understanding all these facets of international business will transform your marketing plan into marketing action.Export Marketing
- Step 5 Entering the Target Market
You have assessed your readiness, completed your export plan, conducted your research and devised your marketing plans. You feel ready to enter the market but seek the best strategy to reach potential customers. There are many market entry strategies however they can be generally grouped in to three main categories, direct, indirect and strategic alliance.
Direct Exports involves the direct marketing and selling to the end user or client. This may be a viable option for some familiar accessible markets however those less familiar may have different legal and regulatory environments, business practices, customs and preferences that rule out direct exporting as an option. A local partner for example may be better able to manage such complexities and serve your potential customer better.
Indirect Exporting is one of the most frequent methods used to enter a new market. Businesses selling products enter into an agreement with an agent, distributor or a trading house for the purpose of selling (or marketing and selling) the products in the target market. Due diligence is critical when selecting an agent or distributor for indirect exporting.
A Strategic alliance or partnership with other companies or individuals that have complementary skills and capabilities is another means to market entry. A partner can often provide the insight, contacts and expertise that fill any gaps in your export readiness. A strategic alliance with a company selling a complementary product or service can provide more effective market access, resulting in more foreign sales in less time. As with indirect exporting relationships, contractual agreements with partners must be stated in clear terms. Some useful resources to visit for channel distribution are;
- Distribution channels (Exports.gov)
- Export directory of U.S. Agricultural Suppliers (Foreign Agricultural Service, USDA)
- Export directory of Washington Commodity Suppliers (WSDA)
- Export directory of U.S. Food Distribution Companies (Foreign Agricultural Service, USDA)
- Agent distributor qualifications checklist (SBDC)
- Sample introductory letter to potential overseas representatives (SBDC)
- Sample foreign representation agreement (SBDC)
- Sample foreign representation agreement (CITD)
- Sample export sales representation agreement (CITD)
Take a look at our short guides on:
- Step 6 Pricing Your Product or Service and Receiving Payment
Typically, international pricing is more “negotiable” than may be the case domestically and your pricing will be affected by your chosen distribution channel and even the exchange rate of the target market. Either way you want to remain competitive in the minds of the consumer in the target market.
There are a few practical elements you should understand about terms of sale:
- Incoterms – these are internationally agreed rules setting out delivery terms for the goods being traded across borders. They allow both the buyer and seller to agree details on the terms of sale and prevent any future misunderstandings or disputes. Broadly they will set out who is responsible for the cost of transporting goods including any insurance, taxes or duties, where the goods should be picked up from and transported to, and who is responsible for the goods at each step during transportation.
- To learn more visit the Incoterms® 2020 Resource Hub.
- Export documentation – make sure you establish the types of document you’ll need to provide to enter the market.
- Written quotation – make sure you provide a written quote which deals with the particulars of your product including the size and packaging formats, as well as any potential additional cost for providing export labelling and packaging which you may be charging on to the customer. Setting out the price and delivery terms (incoterms), the estimated date of shipment on arrival and payment terms and conditions is vital if you are to avoid any disputes further down the line.
There is a risk of late, or sometimes non-payment of bills, which can be greater when conducting business internationally. Getting paid from overseas is as much about an assessment of risk as it is about setting acceptable payment terms and methods. Insurance to protect you is also worth considering.
Before entering into any agreements with new customers who are requesting any form of trade credit you should do full due diligence on them and run a credit check. If they’re credit worthy then move on to considering the currency issues. For example in some countries there are restrictions on access to foreign currency and so some customers may find it problematic to get hold of enough of your currency to be able to pay.
Any business, which sells on credit, can use factoring to free up cash flow, and this may be something to consider particularly when trading in overseas markets. Factoring companies specialise in collecting money and will pay you a percentage of the invoice value upfront, plus any balance, minus commission, once they have received payment. Export Factors specialises in this for the collection of money from overseas.
Some useful resources can be found below;
- Step 7 Getting your Product or Service to Market
Every market has its own set of rules and regulations covering safety, health, security, packaging and labeling, customs and duties among other things and these may vary depending on the product or service you are exporting. It is critical that you understand the rules and regulations that apply to your product or service before you ship your goods or even embark on opening a foreign business location.
Many first-time exporters use a freight forwarder to help them with international inspections and export documentation. Freight forwarders are experienced in rules and regulations of importing countries, methods of shipping, export regulations, and completing documents in a timely manner. It is the responsibility of the exporter to hire a freight forwarder; importers rarely (if ever) do this. The freight service starts from coordinating shipments at place of production to completing trade documents.
Also consider taking part in our PRONET Export Marketing workshops, which will help you to understand the challenges of exporting and take you through a systematic approach in preparing for export.
Also depending on the market and the route you are taking, necessary skills may include language fluency, good understanding of cultural differences, ability to research and evaluate your target market, and experience of dealing with freight forwarders or customs agents. You will also need to define the main stages, tasks and budgets required to implement your market-entry strategy. Also you will also need to consider training existing staff, employing new staff with the required skills and experience or using consultants to work with you in Ireland and/or overseas.
Take a look at our short guides on:
- Step 8 Financing
While there are overnight export success stories, most companies must be prepared to invest both time and financial resources to see the return on their investment and the subsequent success. Consequently, financial stability and a secure cash flow are important during this period. In some cases, businesses can rely on their domestic sales to sustain their early export efforts. If this is not possible, it is a good idea to know what financing options are available. Exporters must develop a financial plan to understand and address the diverse costs associated with exporting, complete with a two- to three-year cash budget to cover expenses and a capital budget. A capital budget is a cost-benefit assessment of your export objectives and serves as your operating plan for measuring expenditures and revenues.
Also important is the guide “How to Access Trade Finance” – A Guide for Exporting SMEs : This is a Guide developed by ITC and provides the SME manager with key advice on how to understand bank requirements, prepare a bankable proposal and a solid business plan, conduct better negotiations with banks, and use banks to boost their competitiveness. The publication also describes how to develop a relationship between a new breed of bankers and SME managers. These are bankers who are ready to work closely with the SME community to understand their needs and provide new solutions.
Take a look at our short guide on:
- Step 9 Legal Considerations
Exporting exposes Caribbean businesses to unfamiliar laws and regulations. There are numerous international conventions, treaties and national, regional and municipal rules that can affect your ability to operate successfully in foreign markets such as the Economic Partnership Agreement (EPA). Exporters may also encounter disputes with agents or distributors, clients or creditors. It is important to understand your rights and obligations when resolving disputes, selling goods or services and protecting intellectual property. Please visit the Caribbean Court of Justice for dispute settlements.
Take a look at our short guide on:
- Step 10 Start Exporting
You have committed yourself to exporting and assessed your readiness. You have the skills and the resources to undertake the challenge. You have conducted research on the market and prepared your export plan, international marketing plan and financial plan. Your market entry strategy is clear and the support systems (i.e. freight forwarder, customs broker, financial lenders, legal advisors) are in place. You have gone through the export process step-by-step and feel confident that you have covered all the bases. Now, it is time to put all this skill and knowledge to use.
The world is waiting for your product or service!