5 key questions your export plan should answer
Your export plan is like your company’s résumé for international trade. It answers all the key questions about why, when and how you want to expand beyond Canadian borders.
And just like you would tailor your CV to match the job you are trying to get; your export plan needs to be tailored to the market you’re targeting and the person you are talking to.
Depending on the type of product or service you are selling, or the complexity of your target market, a comprehensive export plan can have between 20 to 50 pages, and should include a solid executive summary of no more than 1.5 pages.
It provides a high-level plan for your international expansion, says Gwenaële Montagner, Senior Director, International Trade Development at World Trade Centre Toronto.
“A well thought plan could be 30 pages or more,” she says. “The trick is to adjust the content and format depending on who will read it and what your needs and objectives are.”
“Your export plan is your export resumé and a reflection of what your company is.”
When it comes to creating your plan, it should be approached in the same way you would a business plan: methodically and step-by-step, based on research, she says.
Here are five key questions that must be answered when you are working on your export plan.
1. What are your expansion goals?
Montagner says an export plan needs clear goals and objectives.
To start with, think about where you want to be in six months, in two years or in five years. Then ask yourself how export fits into that overall objective. Exporting can help you achieve many things.
- Do you want to increase your sales?
- Diversify your markets to lower your dependence on a market or group of clients?
- Extend the life cycle of your products?
- Improve your competitiveness?
“The hardest part of your plan will be defining the road to the future,” Montagner says. “You have to define your destination before you put into place any of the tools to get there.”
Writing the plan shouldn’t take more than a few weeks but determining your goals and completing your go-to-market research could take months, she says.
2. Do you have the resources for international expansion?
With a clear idea of what you are trying to do, you’ll then need to ask whether you have the capabilities to achieve those goals.
If you want to increase sales by 20%, for example, do you have the sales staff and tools, and the production capacity in place today to meet that goal?
An internal analysis of your company’s resources will help answer those questions.
Having access to the right expertise is a key part of international success
A key part of your internal analysis will be to look at the staff or expertise you will need to expand. Montagner says you will need to determine if there is an employee who can focus on exports, if a new employee needs to be hired or if the responsibility should be contracted out.
A few possible questions:
- Do I have an employee with knowledge of international shipping and customs?
- Do I need to hire employees to boost my production capacity?
- Do I have employees who are from or speak the language of the market I have chosen?
- If I do not have any in-house capability, how do I go about acquiring or contracting the right expertise?
Increasing your company’s headcount might not be the solution for you, in which case you need to explore other possibilities that exist to support your business.
Your internal analysis also needs to take a close look at your finances. The cost of developing business internationally is invariably higher than what exporters often estimate initially.
Once your resource analysis is completed, you will need to assess whether you will need additional financing to hire staff, acquire new production tools, office space, IT requirements and other measures across your company to expand internationally.
“You can’t ask for it, if you don’t know what you need.”
3. What is your target market?
Trying to enter multiple different markets at the same time is a recipe for failure if you are new to exporting, Montagner says. Your export plan needs to specifically state where your company wants to expand and why. It does not generalize.
If you plan to penetrate several markets, ensure you adjust your objectives over short-, medium- and long-term perspectives.
It’s not good enough to say that your expansion target is Europe, for example, because there are 27 countries in the European Union and it’s not a uniform block of customers or markets, she says. It’s the same thing with Latin America, Asia, Africa or the Middle East.
Narrow your focus to one specific market or choose markets that are similar in culture, legislation or distribution.
Also be aware that a market is not necessarily defined as a country. For example, you could decide to te all New York Jewish bakeries if you happen to be a specialist in Jewish pastries.
“Market selection research is a key component of being successful when you go international.”
Take advantage of free trade agreements
Canada has a relatively small consumer market with its population of about 37 million. However, with 14 free trade agreements in force, Canadian businesses have significant advantages over many other foreign competitors. By removing major trade barriers and easing trade flows, these agreements give Canadian businesses preferential access to more than 1.4 billion consumers in 50 countries around the world.
Canadian businesses should take advantage of those and aggressively look beyond our traditional export markets like the U.S., Montagner says.
4. How will you enter your chosen market?
Once you have selected your market, how will your company enter it? You need a market entry strategy for your export plan, Montagner says.
Again, there are a number of questions to be answered.
- Do I want my company to enter into a joint venture with another company for my chosen market?
- Would I rather find a distributor or open my own office?
- Would I prefer selling directly or developing e-commerce?
Once you have decided on your entry methodology, other questions need answers:
- Will all of my products be offered internationally, or just a few?
- Do I want to offer the most expensive product, or is am I looking to increase productivity? If my purpose is to increase my productivity, should I lower my prices and increase volume?
- What is my pricing strategy?
- Have I done a supply chain analysis?
- What communication and marketing strategies should I develop?
- What are the barriers to entry and how much do I need to spend to get around them?
- What are my tax and legal requirements in the new market and how do I comply?
Don’t forget about your online presence
Montagner says that even if you’ve decided not to sell online, a good, solid website is critical for credibility and visibility.
“It’s a very, very important part of doing business, especially internationally. You shouldn’t do business without a strong website.”
You might want to have a search engine optimization (SEO) strategy to help drive traffic to your website. But be aware that SEO is only a small part of the picture. Having a well-designed website that loads rapidly and provides easy to understand information is often more important.
Clear and efficient processes are a must
Montagner says businesses of all sizes, need strong processes to position themselves for growth. Processes apply to management of sales, production control, supply chain and other business functions.
For example, if you receive an inquiry from Mexico about one of your products, how will the call be handled? Will it be logged and what is the follow-up procedure? Who handles such an inquiry and how will that lead to the interested customer getting your product? That means not operating in a silo.
“Many businesses don’t have strong processes. If you want to scale up, you have to put a process in place.”
She suggests getting a customer relationship management (CRM) system. “Your CRM doesn’t need to be complicated. You don’t need to buy an expensive system.”
5. What are your key performance indicators (KPIs) and how do you track them?
When you define your export strategy, you will need to define your KPIs. They must be precise and realistic to help you measure your results, Montagner says.
For example, did you meet your target of a 20% increase in sales revenue and 1% increase in margins by December 31st, she asks.
KPIs fluctuate depending on the types of products or services you are selling. Not every KPI applies to every industry. Common KPIs include:
- monthly sales
- sales to date in a year
- overall time in the sales cycle
- closing rate
- Compliance to terms of payment
- burn rate (How much money you are spending in your sales process.)
- average sales price
- lifetime customer value
- customer acquisition cost
- churn rate (How many customers repurchase your services or products.)
Get the advice you need
You can apply for the Trade Accelerator Program (TAP), which helps Canadian small- and medium-sized businesses gain knowledge and a network of contacts to reach their export potential. Through a series of workshop sessions with trade and industry experts, you will get support to analyse your situation and create an export plan that meets your needs.