Tips for getting started in export markets
Published 14/05/2016 | 00:00
Q I run a small, successful manufacturing business in the South-East and believe that I have the ideal product for the export market. Can you give me some tips on how to get started?
AThere are many reasons you might be thinking of exporting; increased profitability, opening doors to new markets, scalability. Every market is different and if you want to expand your business overseas, it's important to plan for issues such as cultural differences, new currencies, pricing and the possibility of big competition.
1. Research - In-depth research is essential before you begin exporting overseas. Firstly, consider what countries might prove the most lucrative for your business. Then build a research check-list to determine the best market. Questions to ask: What are the local customs? Do I need an export licence? Are there cultural, administrative or economic barriers to success? What taxes and duties will be charged? Are there legal packaging requirements?
2. Start small - Before you start thinking about global domination, focus on one or two markets. Begin by targeting markets with conditions in your favour (cultural similarities, demographic, competition and infrastructure etc)
3. Make a plan - Draw up an export business plan outlining your path to growth. Questions to ask: Where will my product sell? What's the profile of my target market? How will I manage distribution? Do I need to make any changes to my product? What does the competition offer?
4. Pick your channels for distribution - Carefully research your options for distribution and work out who will take responsibility for each stage of the product's journey from you to the customer. Using a distributor might be a quick route but you could lose control over your sales, marketing or customer service. You could also use an export agent who will travel, handle logistics and make contact with buyers. They earn a commission on any sales and it can be a relatively easy way to enter the export market.
Another option is to join up with a business partner in that country or create a licensing arrangement with a local business. You'll need to do extensive research to find the right partner and draw up a detailed agreement to protect your interests.
Questions to ask: How will the goods be transported? Will the importer or exporter pay for the insurance? Are there any specific local payment requirements? It's important to research the communications infrastructure of the target market, including the quality of the sea, air, road and rail transport.
5. Manage risk - Talk to your bank about getting a 'Letter of credit' to ensure you will be covered for any late or non-payments. Despite good intentions there may be communication problems, political unrest or other issues that could delay payment or even put you out of business.
6. Foreign currency - Research the local currency and consult with experts on the impact of currency fluctuations on your business. Consult a foreign exchange advisor or an accountant on how to mitigate your foreign currency risk.
7. Get support & Grant Aid - Consult international expansion experts & agencies and get help from organisations that can help you get established and have expertise in this area. The Irish Exporters Association can be contacted on 01 6612182 or log onto www.irishexporters.ie. Also, Enterprise Ireland supports the development of manufacturing and exporting services and have many start up programmes and grants for companies who have export potential. You can contact Enterprise Ireland on 01 7272000.