According to the Department of Foreign Affairs and Trade, in 2015 the United States was Australia’s second largest two-way goods and services trading partner, accounting for 10 percent of total trade, highlighting the opportunities still open to Australian SMES in the US market.
However, small businesses across Australia continue to encounter a number of barriers to export which are preventing them from capitalising on global opportunities. These include a lack of knowledge about potential markets and opportunities and difficulty accessing funding, often due to cash flow issues.
One small business that has overcome these barriers is digital marketer OneAffiniti, which has innovated its business model and identified innovative sources of finance to fund its international success.
OneAffiniti is a Sydney-based agency that specialises in providing marketing-as-a-service programs to the IT industry. The company’s market-leading platform, PartnerReach, allows top IT companies like Lenovo, Dell and HP to outsource their direct marketing functions while retaining visibility of the end buyer.
Under its innovative business model, OneAffiniti reaches the small and medium enterprise (SME) IT market by partnering with trusted IT re-sellers.
On the back of the company’s huge success in Australia, an opportunity arose in 2015 to launch PartnerReach in North America, as a joint initiative with one of its long standing clients, Lenovo.
The large size of the American IT industry – 70,000 re-sellers in comparison to 6,000 re-sellers in Australia – ensured there was significant growth potential in OneAffiniti’s offshore expansion strategy.
In order to capitalise on this opportunity, OneAffiniti needed to establish a sales office in the United States, which would recruit local re-sellers and provide ongoing customer service. The office would operate in addition to the software development, campaign management and administration functions that are undertaken by staff in Sydney. However, OneAffiniti was unable to secure sufficient funding from its bank for this new office, given the company’s lack of tangible security.
“Once we’d made the decision to go to the US, we looked at various options for how we would afford launch. And we did find it was very difficult for us to have conversations with the banks and secure a loan up front, primarily because we are a digital marketer and we don’t have many fixed assets,” said Joel Montgomery, Founder and CEO, OneAffiniti.
Australia’s export credit agency, Efic, provided a A$500,000 Overseas Direct Investment Guarantee, which allowed OneAffiniti’s bank to approve the working capital needed for the establishment of the new office in Austin, Texas.
According to Joel Montgomery, “The funding from Efic was critical. Without it we wouldn’t have been able to secure the loan from our bank.”
Having an ‘on the ground’ presence in Austin – a call-centre hub for many major IT companies – ensures OneAffiniti is well-placed to launch its product successfully in the US and deliver on its long-term overseas expansion strategy.
Lessons for small exporters
OneAffiniti has overcome a number of barriers to export by taking steps to innovate its business and marketing models, and finding alternative sources of finance. Small businesses can follow in these footsteps if they take a similar approach.
Five steps for export success:
#1. Analyse your existing business model and identify the areas where you can add the most value for your customers.
#2. Consider how you can adapt your current model to deliver value more simply and directly.
#3. Take advantage of digital and social platforms to maximise cross-border exposure.
#4. Use data to understand your target market.
#5. Consider alternative funding sources that can help you build your global presence without sacrificing equity or control.
Andrew Watson is the Executive Director of Export Finance at Efic