For many Aussie SMBs, the lure of exporting to new territories is exceptionally tempting. However, understanding how to launch a product successfully to an overseas audience can be tricky. Follow our top tips to avoid the risks and earmark your venture for success.
We’ve all heard the stories of small business owners catapulted into wealth beyond their dreams after successfully tapping into the Chinese market or launching their products in the US. Whilst these make for great headlines and morning show TV segments, the reality is not every export story is a success. For the majority of SMBs, growing their export business is the result of a long-term commitment and a sound understanding of the export market and the logistics it takes to deliver. Like any new venture, it pays to do your homework first. Before you take the leap into global domination consider these six important tips.
Understand your market
Before you even set foot on foreign soil it’s essential you do your research. Decide which market you want to explore and why. You may think your product is suitable for export to a number of markets but start small. Explore exporting to one country only. Check out the country profiles on the Austrade website for a greater understanding of how business operates, particularly in popular Aussie export locations such as China, Thailand, India, Brazil and the UK. The Austrade site also has a wealth of information on grants, free trade agreements and guides to readying your product for export.
Are you ready to export?
Solid domestic sales will often translate to a strong export market. BUT always do your research first. It’s possible that you are not the first business in your industry to consider exporting to the region. Can you meet with these other exporters to glean insights on the market? If not, you could consider joining a trade mission to the country you are planning to export to, in order to get information from the ground up. Have you made an export plan? Exporting your product to a new country can come at a considerable cost. Does your business have the cash flow and processes in place to sustain the initial cash drain? Understanding cash flow is critical to business success. Check out NAB’s online cash flow improvement calculator to understand the financial wellbeing of your business before you contemplate exporting.
Know the regulations
Again, this comes down to research. For example, some countries have different labelling considerations than Australia. And what about safety standards? Are you exporting electrical devices? Do the plugs meet voltage needs and are they certified for local use?
What about your packaging? In certain Asian cultures, some colours are more favourable than others or can have negative connotations. It’s important to make sure your product meets all local regulations before you even consider exporting.
What about IP?
Have you trademarked your product? Before entering any international market you should take steps to protect your intellectual property (IP). That includes protecting not just your brand name but its logo and any other IP. While it won’t necessarily stop copycats it will give you some legal recourse should someone try to swipe your product idea in a foreign market. You can check out the IP Australia site for more information.
Manage the risks
Whilst exporting your product can bring opportunities, there are also a number of risks that can occur. Apart from obvious risks such as non-payment for goods, there are other risks that should be considered. These include the current rate of exchange, political risks such as government instability and civil disorder, trade sanctions and product liability laws. Bribery, graft and corruption can also be commonplace in some countries, so be sure to brush up on the legalities when it comes to recourse should you be affected. Then there are compliance risks – if you are exporting wood or food products be certain they meet quarantine requirements – or risk having your goods seized or destroyed. It can be useful to work out a risk management matrix to clarify the type of risks you might face in exporting to a new market.
Avoid a marketing blow out
Finally, to avoid blowing your budget with the launch of your product in an overseas market, do your sums! Don’t forget to include a travel budget in your calculations as you’ll undoubtedly want to visit the new territory in the teething stages. Devise a marketing plan and stick to your budget. Don’t forget to include the cost of new marketing materials translated into the language of your market.
Whatever you do, don’t forget your domestic market. It can be easy to neglect your existing customers when your sights are set on a shiny new marketplace, but it’s important to keep nurturing your business at home. If you really can’t split your focus, consider delegating some of your usual tasks to other staff members so that your local business continues to grow and your customers remain happy.
Exporting your product to a new market can be a satisfying and lucrative experience but always remember to do your research first and weigh the risks for your business by speaking with a financial adviser before considering taking the plunge.