15 Tips to Start Successful Export Business
Copyright © 2003-2014 Joseph Zaritski. All Rights Reserved.
Before You Export - Get Ready
1. Where to start?
Build A Corporate International Image
Your credibility is key to your global success. Even if you run a small company you should present yourself internationally as a solid and reliable potential partner. A few small subtle changes and touches will add considerably to your global appearance.
- Adapt corporate stationery to your export activities - add "+61" the international dial code and the word "Australia" to contact details and business cards.
- Develop and enhance your company logo
Always sign outgoing correspondence indicating your job title, company name and contact details, for example:
John Smith, Export Manager
Australian Trading Company Pty. Ltd.
124 Deakin Avenue Mildura VIC 3502 Australia
Phone: +61 3 502 6776
Facsimile: +61 3 502 7667
- When talking to prospective buyers, don't say "I" - always say "We", "We are", "We can", "We do".
Talk To Others
Investigate Federal and State government export support programs and other assistance available. Talk to the regional Austrade representative.
Most likely there are companies in your region that sell and export similar (not necessarily the same) products or services. Make a point of meeting and talking to them. Successful people are usually willing to share their knowledge and experience. Not only can they advise you on some important issues but also may be able to introduce you to key service providers and potential overseas buyers.
Learn About Export/Import Regulations And Terms Of Trade
Contact your industry association and relevant export authorities ask and investigate if there are special requirements for your products to be exported. You may need a licence, export permit, veterinary or fito-sanitary certificate or have to meet some other export requirements.
Austrade and other export bodies will be able to advise you on import requirements and regulations that the selected markets may have.
Contact the Consulate (in Australia) of the country you intend exporting your products to and talk to the Trade Commissioner.
Spend some time to learn about terms of trade and delivery, methods of international payments, International Trade ethics and so on. You need to be able to select the most favourable terms and clearly understand the benefits of these terms.
Hire experienced people or train your staff
Make sure that everyone in your company knows and understands that from now on you are a global company. All export inquiries must be referred to appropriate personnel. Appoint a designated export manager or officer, do not allow your secretary or a production supervisor to manage your exports or to act on behalf you or your export manager.
Exporting is complex and competitive. It is essential your staff know the differences between domestic and international sales and most importantly the terms of trade as well as understand the rules and ethics of International Trade
2. Go Online
Get a web site
Nowadays, having a dynamic corporate web site is a "must" for International Trade. Nine out of ten of your potential buyers will seek and learn about your company and its products through the Internet prior to actually approaching you and if they can't find or are not impressed by your web site, they may very likely choose and deal with your competitors.
Get an online catalogue, present your products and indicate your general terms of trade on your web site. Provide visitors with direct contact details. Introduce a facility to receive export inquiries. Develop an attractive web site, one which will not only represent your company and products but also will save you time and money.
Take advantage of the Internet
There are numerous free online trade boards, import-export directories, forums, etc. Spend some time and post online offers on these sites. Not only will it increase your chances of being found by potential buyers but will also add value to your web site's Search Engine ranking.
3. Select And Evaluate Your Market
Data -> Information -> Knowledge -> Wisdom
There are numerous accesable markets worldwide that seem to offer a high potential for exports, however the real questions are; how to select your market and how to target it smartly.
Credible information is what you need to select your appropriate export market. Using Austrade, a chamber of commerce, industry associations, relevant export authorities and business colleagues might be of assistance. However few will give you specific advice, but you can quite easily gain quality knowledge on which markets to aim at globally.
Statistical data analysis is essential when selecting the market. You can obtain useful information from the Australian Bureau of Statistics and from commercial companies which specialise in collecting international trade data. Some companies are able to provide you with very specific export/import data about products similar to yours and about the most popular markets, at a price.
The Internet is a great free source of information. Go online and browse the Internet for information. You may not find the exact answer, but I'm sure you'll get some indicators and good ideas that will help you.
A good indication of an export opportunity is the number of inquiries from a particular market. If you receive considerably more inquiries from Korea than from any other market it is a good sign there is a significant demand for your products in Korea.
Australia's geographical location plays a certain role in exporting. Asian markets are much more attractive in terms of transportation costs and time. Asian customers are familiar with Australian products this quite often makes it easier to negotiate better deals with Asian buyers.
Rapidly growing markets, such as China, South East Asia and India are better targets for your initial exports than developed European countries.
When selecting a market you should:
- Know the market's requirements
- Assess your target customers
- Examine your competitors
- Be prepared to compete against lower-cost, lower-priced local companies
Talk to Austrade's local office
Austrade can assist you in evaluating and entering the market. Do not ignore this option. When contacting Austrade's local office, do it in writing. Introduce your company, indicate your interest and be specific in your inquiry.
Catch a plane!
Go to a target market personally and get a feel for local products, conditions and competitors. Do your homework before the trip:
- Have a list of tasks you want to complete
- Arrange a meeting with the Australian Trade Commissioner and several meetings with prospective buyers
- Visit wholesalers or stores selling products similar to yours
- Review competitor's products, prices and analyse their pricing policy
- Get to know current affairs and a little history and geography
- Learn a little language, "Hello" "Please" and "Thank you" will be appreciated
4. Understand every market is different & changes every few years
We have deliberately emphasised this issue as a separate topic. To disregard it is one of the most common failures in International Trade. Your products may be in high demand in one market and be absolutely unsaleable in another. Packaging you've introduced for your US customers will most likely be unattractive for potential Indonesian customers. Without an understanding of market trends and demands, their nuances and uniqueness, business traditions, culture and people's mentality it will be "mission impossible" to successfully develop that market.
You also need understand that every market changes every few years. Technology, globalisation, privatisation, lifting of trade barriers and softing of import/export regulations are major factors which affect International Trade. And while you might think that these factors are too hard to keep in mind when considering your offshore activities, they can certainly influence each market radically and you may need to adjust your marketing and export strategies according to the current situation in each market.
5. Analyse, "Position" and Modify Your Products
Packaging optimisation for shipment
There are two major objectives in packaging optimisation with regard to shipment:
- To reduce shipping costs and
- To ensure safety
For example, Joseph used to export fruit juice to Moscow and had to allow up to 5% for damaged stock for each shipment. Due to several loadings/unloadings and temperature fluctuation, air penetrated the bottles and the juice was becoming spoiled.
This problem was resolved when the manufacturer agreed to introduce a special membrane sealing the tops of the bottles.
Packaging, Quality, Price
Australian products are generally dearer than those locally produced. On the other hand, the "green & clean" image of Australian products is a great competitive advantage. You may be surprised to hear that in International Trade the price is not really high in the decision making process. If you sell FMCG you will know that usually, packaging is the first priority followed by quality and then price.
Be prepared to customise your products to meet customers' needs and demands
Domestic success of your products doesn't necessarily mean global success. The major competitive advantage of Australian juice in Russia was the packaging - it was the only juice on the market packed in plastic bottles. However, after several months of sales I discovered that my target audience was limited... due to the packaging. 90% of end-users simply could not afford to buy a 2L bottle. It took me almost a year to convince the manufacturer to launch 1L PET packaging, after that my export sales increased by 80% within six months.
6. If You Fail To Plan, You Are Planning To Fail
Create unique marketing strategy
Professor Michael Porter of Harvard University said that a company doesn't really have a marketing strategy, if it performs the same activities as its competitors,only a little better. To be successful you should have a strategy, that has strong points of difference from your competitors' strategies.
Develop a marketing plan for each market
Marketing plans don't have to be a 100+ page documents with numerous tables and diagrams. Try to keep it brief and simple. At a minimum, every marketing plan should contain:
- Market analysis
- Marketing objectives and goals
- Marketing strategy
- Marketing action plan
- Marketing controls
In other words, before entering a market you must clearly understand what has happened, what's going on, what you want to achieve, what you need to do to achieve it, how you are going to do that, and what might happen.
It is essential to set up realistic and achievable marketing goals, distribute them to everyone within your company and constantly control and moitor the progress toward achieving these goals.
Develop an export plan for each market
A common misundestanding within the business community is that marketing and selling are the same. That is not quite right. While selling is part of marketing, your export plan has different objectives and focuses on different tasks.
Your export plan should include:
- Export readiness analysis
- Market Research
- Product Development
- Trade Regulations and Barrier Assessments
- Export Strategy
- Terms of trade and payments
- Logistics and distribution
- After-sale strategy
- Export sales forecast
- Implementation plan
Set up export prices for each market
There are no rules in setting your export prices and nobody can tell you what is the "right" price. Furthermore, the price for the same product may vary significantly in different markets and most likely you would have several prices for the same product depending on the following factors:
- Marketing strategy
- Product uniqueness, quality and brand recognition
- Market trends and demand
- Target customers.
How a product is priced is crucial in getting the buyer's attention, before the buyer becomes familiar with the quality of your product, delivery and service.
Your goal in establishing export price is to be able to sell maximum quantity with a maximum profit margin.
It is a good idea to start your planning with a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Having a list of SW and a list of OT would help you to prioritise and understand which matters require attention.
Develop a problem solving plan
Delays, damages, quality complaints, theft and pilfering and non-payments sometimes happen in International Trade. A detailed problem-solving plan of how you will handle these is a vital part of business planning.
7. Build A Network
Exporting is Teamwork
You will not be able or have the time to conduct international transactions on your own. There are always several participants who play an important role in your export operations. You'll be surprised that usually you can find all the support you need in your region or on the internet.
Write down a list of all services you need to be provided for your global activities. This list should be noted within your supply chain plan.
Do you need to open a bank account in US dollars or are you going to receive payments under letters of credit? Then go and introduce yourself, your company and your export plan to a local international banker.
Extra Tip. It is not necessary to do your international banking with the bank you are dealing with domestically. Select a bank with greater international presence in your targeted markets or has a wide network of corresponding foreign banks. The best-case scenario is when the bank you choose has a branch or corresponding bank in the city/country of your interest.
Do your products require to be certified? Talk to your industry association; export authority or certification company representative and build a personal relationship.
You will likely need insurance cover. Most major insurance companies deal through agents. Find an insurance broker, who deals with a reliable marine insurance underwriter, in your hometown and build a personal relationship.
A responsible freight forwarder is a key player in your exports, find these under Export Services. Pay a lot of careful attention to selecting a shipper for your goods and again build a personal relationship.
Never stop building your network. The more reliable business partners you have, the fewer troubles or issues you will encounter.
Do not concentrate on customer management only, but also on their key personnel
A small present to a secretary or to the employee who deals with your bills of lading, may pay you back greatly and unexpectedly in the future.
When You Export - Market From Strength
8. Develop "Export Inquiries Handling Rules"
Respond in 48 hours, even better 24 hours
You'll be surprised by your potential buyers expectations in regards to receiving replies to their inquiries. Especially when you are dealing with Asian or Middle Eastern customers. They send you an e-mail and then call you in a couple of hours later demanding a reply.
We recently received an inquiry from Kuwait. The initial e-mail came through late on Sunday. On Monday morning we had a reminder, that afternoon - another email, this time demanding an immediate respond and on Tuesday morning - a phone call from Kuwait. Was this an urgent matter, no it wasn't. It was an advertising company acting on behalf of its client who wanted to discuss the possibility to promote their business at Export61.
Learn to recognise "genuine" inquiries and beware of "dream" orders
As a rule, a "genuine" inquiry has a brief introduction, is fairly specific in what it is looking for and will have a company name, contact name and contact details.
If you clearly understand that an inquiry you receive isn't worth an answer, just ignore it. For example, if you grow or sell oranges and somebody ask you to provide an export quotation for bearings or if a foreign company is looking for a wide range of Australian food products without any further details, most likely these inquiries will take you nowhere.
Unfortunately there are growing number of companies and individuals out there, who are just playing at International Trade. So if you received an inquiry for the supply of 50,000 tons of table grapes, you can simply throw it out and never reply.
Check Your Counterpart
Before any serious negotiations you should check the background and credibility your potential buyer. Go online and try to find any information on the Internet, contact Austrade's local office, check if anyone in your network knows of this company, ask for banking details and contact the foreign bank, ask your buyer for references.
9. Negotiating Is An Art
Your buyers will be pleased if they manage to negotiate any discounts from you. Don't disappoint them. Include at least 10% in your export prices for negotiating. By discounting the price you'll be able to gain better trade terms. However, you have to be careful with allowances. If the price is too high to begin with you may not get the buyer to even commence negotiations.
Learn about cultural differences
You may offend your potential buyers if you fail to learn and understand cultural differences especially in the Middle East and Asia.
For example, you shouldn't ask about your host's wife if you have been invited to visit your counterpart's home in the Middle East.
In Asia, if you are invited to a business lunch you should be prepared for a 1-2 hours conversation which has nothing to do with your prospective deal. You'll be asked about your family, childhood, hobbies, favourite food, etc. and you should respond accordingly and ask similar questions. Asian people want to know whom they are dealing with before any business discussion begin.
All verbal agreements must be confirmed in writing
This is one of the "golden rules" for your export operations. You must have written and signed confirmation of all agreed terms in hand before you act. A promise "to send you a written confirmation tomorrow" is not good enough, get it in writting.
Exclusivity can be considered but not before you know your buyer
Lots of potential buyers will ask you for the exclusive rights to represent your products or company in a particular market even before they start trading with you. Don't decline this possibility, declare that can be open for discussion but first you have to get to know each other, establish a solid relationship, test the market and so on.
When you agree to provide exclusive rights to a foreign company, you should consider which conditions are to be included in an exclusivity agreement.
Do not sign exclusivity agreements for longer than a year. If you are happy with your counterpart and sales and importantly the way they represent your company and brand in their market, you can always extend the agreement.
You should set certain quantities of your products to be sold in a set period of time, say 4 to 6 months, with a clause to terminate the exclusivity agreement if the buyer is not able to meet these conditions and commitments.
The value of the first order is another issue to consider when negotiating exclusivity. 20% of the agreed yearly quantity prepaid is considered to be a fair and reasonable deal.
If you need a translator - get a good one
Sometimes buyers may require signing a bi-lingual contract. In this case, the accuracy of business translation is crucial. Variations in terminology can differ in some countries and may even have an entirely different meaning and lead to costly disputes.
10. Be Aware Of Frauds
There are people in International Trade that are making a good living from fraudulant practices. The most known schemes are non-payment, sample scams and false complaints.
You may very well secure payment for your products if you do your homework and select the right terms for payments, but it's much harder to protect your business against the other two scams.
A good indication that something is not quite right is a request for a large quantity of free samples in an initial inquiry. For example, if somebody asks you to send 2 or 3 cartons of wine or 100 kilos of meat as a sample, it just doesn't sound right, does it?
False complaints about products or services are quite common and often hard to recognise as scams. The best way to protect your company against this problem is to include a very detailed "complaints reporting clause" in the contract.
After You Export - Add Value
11. Be Market- And Customer- Focused
Build a strong business relationship
Yes this is a cliché and everyone says it. Mean it because you should not avoid it in your business dealings. We want to add an important recomendation, do not ignore small issues in building business relationships, its the little things that make the difference. Believe me if you send a postcard or even an e-mail on major events and national holydays and on key personnel birthdays, it will add considerable value and strength to the relationship.
Win buyers through better service
Remember that the key attributes of every service are:
- Knowledge and
- Problem solving
Win and keep buyers through exceeding expectations
Philip Kotler, the author of several well known marketing books said: "Meeting customer expectations will only satisfy customers; exceeding their expectation will delight them". This is true.
However, the pitfall is, that the better you act, the higher the expectations your customer will expect and one day you find that the task of exceeding the expectations will be too difficult and too costly. You should decide where to draw the line between exceeding the expectation and making a profit.
12. Be Prepared To Meet Growing Demand
If you carefully consider and take into account all the above issues then it is most likely that your products will be successful internationally and the demand for them will be grow significantly.
If you can't meet the demand you risk losing the whole market and your reputation. People are not interested in dealing with you if there is no future growth. Be ready to increase production, form alliances or source similar products elsewhere. But be sure they match your quality, service, prices and if possible branding
13. Be Prepared To Spend Time And Money
Generally, investments that you will need to make in international markets are greater than domestic investments. Exploring and researching foreign markets can take longer and cost more than expected. However the rewards are equally greater.
14. Make Decisions On A Commercial Basis
Making decisions on a commercial basis does not necessarily mean that profit margin is the only factor to consider.
You need to clearly understand what benefits you and your business will gain by reducing your profit margins or spending profits on offshore marketing.
15. Don't Try Too Much At The Beginning And Don't Grow Too Fast
Concentrate and succeed in one market at a time, moving to the next only after securing market share in the first. Be patient, wait until cash flow is strong enough to justify your expansion.