Some Basics of Exporting
- Published: Monday, May 10, 2021
In the first article, we shared some basic information on some of the “whys” of exporting, including the expected growth in the international market for US businesses and available resources in this area for the small business owner to succeed. In this article, we will start to explore some of the factors to take into account as you reach a decision regarding if exporting is the right next step for your business.
There are a number of excellent publications on this topic that span a variety of perspectives for businesses that are exporting either goods or services. These may be easily found using any of today’s internet search engines. Most experts note between five and ten key considerations that provide a foundation for a decision to export. Below, we summarize those we view as the most critical, and in future articles, we will take a more detailed look at each.
The Business Case
A good place to start is to ensure there are no export restrictions for your product. Once that is assured, review your business’s strategic plan, in particular, mission and vision. Is export something you have been thinking about for some time, or a more recent consideration? Below are some aspects to consider in making a decision on export and incorporating it into your strategic plan. Do you have the production capacity and infrastructure, as well as the necessary personnel to allow you to successfully execute a plan to build export as part of your business? Making the business case should be based on a review of all business aspects associated with your export efforts, including the availability of adequate personnel availability and expertise. You should also consider financial and legal resources, product pricing, anticipated transportation and distribution costs, and an assessment of your competitiveness in the new market.
Understanding the Foreign Market
Understanding the opportunities, cultural aspects, local business practices and the legal/regulatory environment of the county you select for export will be key to your success. There are a variety of research tools you can access to identify the benefits of exporting a particular product to a specific county. This information can provide valuable insight that will help guide your export decision. Lastly, you may need to be open to new ways of doing business, since business practices differ around the world.
Planning, Timing, and Documentation
Allow adequate time to properly prepare to export. This includes a thorough analysis of all aspects of the business case, developing a well-defined export strategy, identification of sales and marketing strategies, selection of a distributor, and development of a distribution contract. You will also need to establish a method to receive international payments (and remember that exchange rates can fluctuate). And you should give thought to the time needed for the acceptance of your product in the new market and when you can anticipate revenues. Proper documentation can allow orders to proceed more rapidly, expediting market penetration and revenue to your business.
Decisions regarding each of the above areas will allow you to develop an export strategy, which should become part of your company’s strategic plan and business model. It is important to set goals and expectations ranging from anticipated revenue to production capacity. Define the personnel that will be involved as well as their roles and responsibilities. Track costs for each aspect of the export effort and identify any economies of scale that are achieved by the addition of exporting. Each aspect of the process, from personnel through revenue, to continued fit with your strategic and business plans, should be reviewed and evaluated on a periodic basis. And finally, one other topic not yet discussed is that of local representation. Will you have a local presence, beyond sales, in the country to which you are shipping?
Help Is Available
The Missouri SBDC has resources and counseling services to assist you to advance your business with export in all of the areas above. Please reach out to us for assistance.
Check out other articles in this export series: Should I Export My Business's Goods and Services?, Exporting - The First Step, The Export Plan: Marketing Research, and The Export Plan: Pricing Strategy
The Missouri SBDC is funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA
Writer: Robert Schwartz