The best way to start exporting is to prepare a detailed exporting plan as part of a larger strategic plan for your business.
Your export plan will provide you with:
- A disciplined approach to enter the market
- An understanding of the environment in which you'll be working in terms of the competition, potential partners and the regulatory framework
- A competitive position from which to enter the market.
- A budget for your venture
- The stages of the expansion and insurance against risks
- An implementation schedule
- Details about who is responsible for each task
As you create your export plan, you’ll want to make sure it effectively covers all the important points. Here are seven key questions your exporting plan should answer:
1. What are my strengths and weaknesses?
Take a close look at your readiness, including an evaluation of your current resources, strengths and weaknesses. Make sure your company’s fundamentals are strong, including financial management, sales and marketing processes, innovation strategy and operational efficiency.
Ensuring your operations are lean is especially important. As a general rule, If there is still work to be done on productivity, it’s better to do it before you start exporting.
2. How will it impact my finances?
What are your financial targets for your exporting efforts—costs, product pricing and cash flow? Have you taken into account the possibility of longer payment cycles, higher cost of sales and the cost of risk protection?
Start-up costs in foreign ventures are often higher than planned, while revenues are lower. For example, payment terms are often longer in foreign transactions than in Canada.
It’s best to speak to your bank beforehand about your financing needs to avoid unpleasant surprises and get optimal terms.
You may also want to check out insurance that helps businesses mitigate risk when exporting. EDC provides credit insurance to protect exporters against losses if potential customers cannot pay.
3. Which markets should I target?
Where should you focus your efforts when expanding abroad? Surprisingly, many companies don’t study this question very carefully before plunging ahead. But it’s crucial to your success to be strategic, not reactive.
When studying your various options, consider such questions as setup costs, the tax and regulatory climate, competition, labour availability, shipping costs and insurance needs. If you’re considering a larger country, such as the U.S., Brazil or China, it may make sense to narrow your focus to specific regions in the country.
4. How is my target market different?
To clearly identify risks and potential pitfalls, it’s important to understand the political, administrative, cultural and economic environment in your target markets. You also need to know who your potential customers are, how their tastes differ from your typical customers and what makes them tick.
5. Do I need to adapt my products or services?
Many Canadian companies don’t achieve optimal results abroad because they assume a product that sells well in Canada will sell elsewhere without any adaptation. However, failure to adapt to the needs and desires of foreign customers can result in costly false starts.
It’s a good idea to clearly articulate your value proposition in each market, while identifying direct and indirect competitors. By approaching this task with an open mind, you are less likely to have unpleasant surprises in a foreign market.
6. Who are my competitors?
While you may not have the budget to hire a professional market intelligence firm, there is a lot you can find out about the competition by doing a simple online search. Search for your competitor, what products they are selling and how they’re positioned on the market. You might even want to purchase their product or service to evaluate their quality and see how you compare.
7. What rules and regulations do I need to comply with?
Remember that entering a new market also means entering a whole new regulatory environment.
You’ll need to know what you have to do to ensure your products are properly inspected, certified, insured and transported. As well as have a plan in place to deal with taxation, regulatory issues, standards compliance and labour laws.
And don’t forget about Canadian export reporting requirements as well as rules on controlled exports.
Find the right help
It may seem like a daunting challenge to put together all that information, but it’s better to be prepared than to suffer a costly setback.
Many entrepreneurs turn to the services of an experienced consultant who can evaluate their company’s readiness for exporting and help make preparations including taking a trip to target markets. In foreign markets, an experienced and trustworthy distributor or agent can smooth the way.
Various government departments, agencies and institutions offer services and advice to businesses interested in exporting, including Innovation, Science and Economic Development Canada, Export Development Canada, the Canadian Trade Commissioner Service and the Canadian Border Services Agency.