With strong demand for Australian products and services around the world, there are some exciting opportunities for small businesses that are considering expanding overseas. Exporting can be daunting, but there are steps small businesses can take to ensure they set themselves up for success in international markets.
Identify the right market
One of the most common mistakes new exporters make is picking the wrong market, which may be due to misguided assumptions about demand for their product in the market. Doing careful research and planning prior to expanding internationally will ensure you pick the right market for your product.
Small business exporter Studio Agency, a Brisbane-based fashion designer and wholesaler that exports a range of women’s fashion designs, knew finding the right export market for their products was critical. “When we started exporting, we looked closely at our target markets, and in particular the stores in those markets, to ensure we were targeting the right styles, price points and age groups”, Studio Agency Founder, Zoi Vafias explained. “We identified the UK, Sweden, New Zealand and the US as markets with store offerings in which we knew we could compete.”
Explore your finance options
Small businesses often spend a large amount of their time managing their cashflow and when it comes to exporting, there are a whole new range of financial considerations.
One of the most common problems for small businesses is funding export growth, with many businesses needing support to enable them to fulfil export contracts. Studio Agency came up against a similar issue. “Finding capital for growth was a challenge we faced. We were in a strong position to grow our agreements with a few international stores, but we were worried about selling more product in case we couldn’t deliver”, Studio Agency’s Vafias recalled. “Efic provided us with a $180,000 export contract loan, which we used to fund the manufacturing costs associated with our US and UK exports. This reduced pressure on our cashflow and allowed us to grow our export revenue further.”
Speak to the experts
Seeking good quality advice is crucial before making any important decision for your business. When it comes to export, this can involve a whole new range of considerations, from understanding new laws and regulations, to navigating a foreign language. “People joke that my accountant is my silent partner”, Vafias recounted. “He has given me so much advice over the years and is a valuable source of support.”
“For operational advice, my freight forwarders were extremely useful in providing information around how to ship to new markets and for financial support, Efic has been a great help in terms of understanding and supporting my financial needs. I’ve also done a lot of my own research, using government websites and reading articles about the experiences of other entrepreneurs.”
Do your research
Entering a new market means opening your business to potential new risks, many of which are harder to monitor and manage from a distance. Being cautious before establishing new partnerships, and conducting thorough research, will help minimise the risks to which you’re exposed. “We found that trust is a big thing when you export. We have had to trust the agencies we sell our products to and trust all the stores we deal with, as we are a long way away from the decisions being made.”
“You should do appropriate due diligence and research on everyone you are dealing with to ensure you are not putting yourself at risk”, Vafias recommended.
Andrew Watson is the Executive Director, Export Finance at Efic, a specialist financier that delivers simple and creative solutions for Australian companies – to enable them to win business, grow internationally and achieve export success. Efic has developed a range of free eBooks, called the SME Information Series, which provide information and advice on some of the key issues they face.