Export essentials for your business’s success (Part 1)

You have to know the export essentials for your business

Benefits of Exporting

  • Export increase sales & income
    1. Common needs in foreign markets/more customers
    2. Improved economies of scale
  • Exports diversity market risk
    1. Offset lags in domestic demand
      1. Seasonal & Domestic economic slow downs
  • Exports extend product life cycles
  • Export use idle capacity; reduce unit costs

Key components

  • Product selection – adaptation issues
  • Foreign market selection and targeted countries
  • Entry mode, partner selection
  • International marketing plan
  • Sales and expense forecast

You have to know the export essentials for your business

  • Production selection – are your products ready for export?

    • Import product label requirements (language & content)
    • Instructions/owner manuals in foreign language
    • Material safety data sheets/technical data sheets
    • Product warranties/guarantees – do these need to be changed for export? Can you honor them?
    • Product life cycle
    • Administrative costs
    • Certification costs
    • Electrical & safety standards
  • Cultural expectation

    • Does your product need to be modified?
    • Tug of war between Required vs. desired
      • Taste
      • Product size/quantity
      • Colors
      • Language
      • Package materials
      • Safety concerns
  • Foreign market entry methods

    • Deciding how to enter a new market should be a proactive decision
    • Different methods come with different costs and short/long term rewards and headaches
    • Key questions
      • What is your company’s ability to serve the market?
        • Both to consumers and responding to government requirements
      • What is the overall potential of the market (including related surrounding markets)?
      • What is the position of your competitors?
      • What is your company’s ability to invest in the market?
      • How much control does your company wish to maintain in the sales and distribution process?

You have to know the export essentials for your business

  • Export Methods

    • Indirect exporting
      • export management companies(EMC): A private firm serving as the export department for several manufactures, soliciting and transacting export business on behalf of its clients in return for a commission, salary or retainer plus commission.
      • export trading company (ETC): facilitates the export of U.S. goods & Services. Can be similar to EMC or take title to the products.
      • piggyback exporting: an arrangement in which one manufacturer or service firm distributes another company’s products or services. Successful arrangements usually require that the product lines be complementary and appeal to same customers.
    • direct exporting
      • firms set up their own exporting departments
        • B2C/Cross-border, B2B, or B2 Retailer – avoids intermediary costs and offers more control over price, service and level of effort. It’s a viable option in markets with only a few potential buyers or when you or the end users can easily find each other. It’s usually web-based business-to-consumers (B2C) and Business-to-Business (B2B) trade. An intermediary is not needed in these situations. However, direct sales are less effective where seller and buyer are not easily matched. Without a local representative, you must find the prospects and handle the transactions. This is not cost-effective in most cases. The lost opportunities and high costs of reaching a large buyer universe usually outweigh any direct marketing benefits.
        • Licensing
        • Sales agent
          • Typically act as your representative n the market.
            • They develop and send sales orders, arrange payment in dollars, prepare all required import documents, and clear the goods through customs or assist buyer with importation.
            • The normally work on a commission basis and don’t take title to the goods.
            • Must be careful some countries consider agent’s as employees.
      • Distributor
        • Generally, purchase the goods and resell them at a markup.
        • Many are equipped to stock, install and service the goods.
        • Should specialize in your industry and currently distribute other complimentary products into appropriate market channels.
      • Joint Venture
      • Direct Foreign investment/wholly owned foreign subsidiary
  • Get started on the right foot

    • Develop an export plan
    • Conduct market research
    • Find buyers, B2B, or B2C.
    • Develop a marketing plan
      • SBA export business planner
      • US Commercial Service – Market Research library here: http://www.buyusa.gov/
      • S. Census Foreign Trade Website – Trade Statistics from Export. gov: www.export.gov

This is a lot of information to digest. However, there are more secrets to building a long term success in export, including where to find customers, how do you price, and how to build a financial safety for your business. Please subscribe for the Part 2: Export essentials for your business’s success.


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