7 things to consider before taking your business international
So you’ve decided to target customers overseas with your product or service. Before you start booking flights and setting up logistics agreements, it’s important to make a plan.
Setting your business up for long-term global success requires strategic thought, as well as time and resources. Make sure it’s the right move for your business right now, and with the right frameworks in place you can continue keeping your local customers happy while discovering an entirely new untapped market.
Here are a few things to consider before you take the next steps with your export opportunity.
1. Is your management team committed?
Remember how much time it took to establish your business in your own market? Now think about what it will take to do the same in a market you are less familiar with. You may not speak the same language as your customers, or know who to trust for on the ground support and advice.
Expanding overseas takes time. You might need to spend time physically in that market, meeting and setting up agreements with local buyers, suppliers, distributors and agents. Initially, it could take multiple visits.
You may also need time to research the market thoroughly, and understand local demand, legal requirements and competitor activity.
And then it will take time to launch your product. That can include setting up logistics and delivery processes, creating a marketing campaign, referrals and retention strategies, and ongoing sales with customer service support.
Make sure your senior team is on board, and everyone understands their responsibilities. If one of your managers has expertise in this market or in export, it may also make more sense to make them responsible for overseas expansion while you focus on your established business.
2. Do you have the financial resources?
Like any business growth strategy, exporting can require an upfront investment. This could include travel expenses, additional staff, marketing, trade shows, sampling costs and local consultancy fees.
There are government incentives to help you with some of those costs, including Export Market Development Grants, but you’ll need to have enough cash flow to pay these expenses upfront.
3. How strong is the market demand?
It’s essential to know what your target customer wants so you can build a solid base. Make sure you have realistic sales targets in place, so you can be confident in the demand for your product and service. You also need to know what the market is prepared to pay, so you can help create a sustainable pricing strategy.
4. What will it take to enter this market?
Once you’ve chosen your target market based on an assessment of local demand, you may also need to think about how easy it will be to set up operations in this country. Consider government red tape, local taxes, language barriers, business practices and cultural differences.
The latest AIBS Survey of Australian export businesses revealed that not all ‘starter’ markets are easy markets. Although China is the second most popular first overseas market in 2016 (attracting 12% of first-time exporters), it was also seen as one of the most challenging markets for doing business, with 78% saying it was more or much more difficult than Australia. At the other end of the spectrum, New Zealand, Singapore, the UK and US were considered easier.
5. Do you have export expertise within your business?
Has anyone on your team worked with an export business before? Do they know and understand this market, or have any relationships with potential customers or distributors there? If so, consider making them your export champion, and give them the opportunity to run with your initiative.
It’s also a good idea to tap into your network to help you with their insights and experiences. You could even set up an informal advisory board to keep you on track and accountable for your export strategy.
6. Have you got all the legal requirements covered?
Every country has different rules for labelling, testing and packaging. Check the legal requirements for your product in that country before you start investing in this export opportunity – it may prove costly to adapt your product design to suit their rules, and you need to weigh up the opportunity with the costs.
7. Are your timeframes realistic?
It can take time to build an international business – typically at least one to three years from making the decision to go global, to having your export operations in place. Make sure you have the financial and staffing resources to help cover this commitment and be realistic about when your first sales will come through.