What’s your endgame?
Some business owners are happy to keep their ventures small, focusing only on the local markets where they belong to. Are you content with that?
Probably, you are looking to expand your business further to secure a better future, not only for you and your family but, equally important, for your workers who have helped you build your company from the bottom up.
If you are ready to take on new challenges for your business, you should strongly consider exporting your products to foreign markets.
Why? Here are a few important reasons.
Top Reasons to Consider Exporting
1. You get to diversify.
A business is a type of investment. Any savvy investor will tell you that you need to diversify your investments to protect your venture from vulnerabilities in the domestic market.
By tapping into new markets abroad and diversifying your investment, you manage your risks, provide a buffer for your local interests, and provide another source of income for your company.
2. You gain a new income stream.
Speaking of a new income stream, making a foray into exporting will help increase profits for you and ensure the stability of your business for the people who rely upon you.
If you believe that your product answers a definite need for consumers, customers will readily embrace your offerings. But you will need to find a reliable partner in the new market that you are eyeing to get into.
3. You find an opportunity to scale up.
You’ve got the resources – the equipment, the personnel, the expertise. Sometimes, companies are ready and willing to expand their operations only to be held back by the thinking that there is a limited market for their products.
By venturing outside of local markets, you can leverage your resources to grow your business further.
4. You can counter sales decline.
The sales of some products decline as they reach maturity in the domestic market. When this happens, you can either gamble and release new products to counter this decline or tap into new markets where a new group of consumers will readily embrace your products.
5. You can improve your products.
A good product can always be made better. And to take the necessary steps to improve your product, you need access to objective feedback.
Sometimes, it can be challenging to get multi-faceted feedback from just one market. By expanding your reach to foreign markets, you’ll be able to get a complete snapshot of what consumers think about your offerings as well as critical areas of improvement that you need to pay close attention to.
6. You can keep pace with competitors.
Following the footsteps of the competition is not always ideal. However, if your competitors are already exporting their goods to other countries, following suit allows you to attain a few key benefits.
For one, it will allow you to get on equal footing against the competition by neutralizing their advantage of selling in other markets. Also, if your local market has been invaded by products from other countries, you can counter your competition by entering their home market.
Risks to Watch Out For
As with any other venture, you have to be aware of the risks involved so that you can make an informed choice and move forward with sufficient preparation to face the challenges that come your way.
Here are some of the risks you might encounter when you make a foray into foreign markets.
Delivering to local suppliers poses its unique challenges. But when you need to deliver goods to another country, especially to one located in a different continent, things can get more complicated.
You will need to take into account the different shipping options vis-a-vis costs. Evaluate all available shipping options and requirements as well as the risks involved while also considering possible delays and mishaps.
Currency risks and payment methods
For international trade, you will need to find a suitable payment method that is advantageous both for you and your partners in the new markets that you are entering. Be aware that some countries may have a different fiscal system from your country’s.
Fluctuations in exchange rates can also adversely affect your potential income. As such, you should strongly consider getting paid in your local currency or finding a suitable foreign exchange facility that will give you favorable exchange rates.
Early on, it is a good idea to bring in a lawyer to help you navigate the murky waters of international trade. Differences in legal systems, specifically in the area of importation and exportation, can pose unique problems and risks that you may not have encountered in your local market.
A country’s bureaucratic system can also present a considerable amount of risk for your plans of entering a new market. Problems can range from minor nuisances like red tape to something more complex like restrictions in importation and exportation.
Language and cultural differences
Differences in languages spoken can be a serious problem for you and your new partners, especially if you cannot find a common language to use for transactions, like English. Enlisting the help of a translator can help you overcome the language barrier, including the other issues associated with it.
From a cultural standpoint, you need to be aware of differences in customs and traditions, especially when dealing with your partners and when promoting your products.
Risks are an inherent part of any business. And although you cannot totally avoid these, there are measures that you can enforce to mitigate these.
Preparation is key.
Each market will come with its unique set of opportunities and risks. Before diving into any market, perform due diligence, and conduct the necessary preparations to help you identify risks and ascertain if the rewards outweigh these.
Bolster your team.
Exporting products is an entirely different beast. And although you may have an outstanding team behind you, you will undoubtedly need help from people with different types of expertise. These include lawyers, accountants, bankers, and shipping specialists. Seek their advice early on, not just when you encounter a major hitch.
Map out your strategy.
Once you have evaluated the risks and acquired the opinion of qualified professionals, the final step that you need to take before proceeding is to map out the necessary strategies to minimize the impact of the risks that you have identified.
Fortune favours the bold
Making a foray into exporting is not without its own set of risks. But with due diligence, proper planning and preparation, and the right team behind you, your business can be rewarded handsomely.
As Chief Product Officer for Shipa Freight, Paul Rehmet is responsible for translating the vision of Shipa Freight into an easy-to-use online freight platform for our customers. Formerly Vice President of Digital Marketing for Agility, Paul managed Agility’s website, mobile apps, content marketing and online advertising campaigns. In his 25-year career, Paul has held various technology leadership positions with early-stage startups and Fortune 500 companies including Unisys, Destiny Web Solutions, and US Airways. Paul has a Masters in Software Engineering from Carnegie Mellon University and a Bachelor of Computer Science from Brown University. Paul is based in Philadelphia.