Below is an extract from Laurel Delaney’s book “Exporting: The Definitive Guide to Selling Abroad Profitably.” This book was published in December 2013 and is available for purchase online. If you would like to find out more about the author, the book, or about exporting in general, Laurel’s blog is an excellent source of information.
The Pitfalls of Not Having an Export Business Plan
Not interested in developing a plan? That’s an option and it is your choice. You must be short on time and eager to get to market. Bypassing strategic thinking for short-term gain can be risky (think along the lines of driving a car to a new, distant destination without a map or GPS). Yet it can be tempting because it is a quick way to test whether a product or service will sell in the export marketplace.
In my experience working with hundreds of start-ups and business owners, those who fail to develop a plan make several mistakes along the way. Here are some of the common pitfalls. Believe me, these aren’t all of them.
- They move too soon and fast—having a knee-jerk reaction as opposed to executing on a well-thought-out and -crafted strategy.
- They fail to take a pulse on where their business stands currently.
- They divert attention to the overseas market to the detriment of their local business.
- They employ too-little staff to take on the overseas market.
- They proceed to export in a complex market (e.g., where there is a lot of red tape or the natives speak a different language) or open up negotiations with the wrong party (e.g., someone who is untrustworthy or a bad fit).
- They are too quick to execute on a sale and fail to secure a guaranteed payment.
- They act in a too fast and aggressive manner in providing online banking information to get paid or to pay a supplier, only to find later on that they have been cyberattacked.
- They don’t state clearly on their website, blog, or Facebook page whether they accept international sales orders. If they don’t, they should say so. If they do, then they should state specifically which countries they serve and follow through when inquiries roll in.
- They put all their eggs in one basket and don’t diversify enough to offset the ebbs and flows of the marketplace. They put too much emphasis on one product and one market that aren’t working.
- They never fully understand that they might have vulnerabilities that could impede their ability to get things done.
These so-called export sins are just the tip of the iceberg on what can potentially go wrong if you don’t plan accordingly. If you are still dead set on moving ahead without a plan, do so at your own risk. I urge you, however, to at some point consider formalizing a plan so that you can fully capitalize on your idea and leverage it for luring potential partners, lenders, and investors.
Pointers for Developing an Export Business Plan
You should always measure your plan’s progress against the market reality, which can be highly unpredictable. You can’t go wrong with that approach. For example, you might sell designer diapers via your e-commerce site, emphasizing distribution to English-speaking countries such as Australia and New Zealand, only to find out quickly that the bulk of your inquiries are in French, the native language of the majority of your prospective customers.
Whatever plan you select, have backup Plans B, C, and D in place. For example, let’s say you select Ireland to export catfish to and find out two months later that the Irish don’t like catfish. Plan B might be to sell your catfish to another market, say the United Kingdom, or to sell another fish that the Irish like. Be smart and apply the global mindset we talked about in Chapter 1, which is to stay flexible and adaptable. Just because you revert to Plan B or C doesn’t mean you failed and that exporting won’t work. Rather, it means the market reality is such that your original plan won’t work and thank goodness you were smart enough to develop contingency plans.
Last, free trade agreements improve foreign market access for exporters, promote economic growth, and create jobs. Study active FTAs in advance of selecting an export market and preparing your export business plan to see how they will benefit your organization. Factor that information into your decision-making process accordingly.
For example, NAFTA is the FTA among Canada, the United States, and Mexico serving to remove most barriers to trade and investment in that region.
Once you have a good idea of what you want to export and where, you can fill out your picture of market conditions by answering questions like these (this is a list I put together for a client):
- Who will buy your product and why?
- What is the size of the market?
- Who is your competition?
- How new is the product to the market you have selected?
- Are there growth opportunities in the market?
- What do the country’s demographic profile, economy, and mass culture look like right now?
- Are there demographic, economic, or cultural trends that will shape the market in the future?
- Does the government help or hinder the sale of imported goods? For example, are there any barriers to entry or to sales within the market?
- Will the country’s climate or geography present logistical problems for sales of your product of choice—for example, selling chocolates to hot and humid Bali?
- Does the product have to be adapted to that market by way of a physical reconstruction, a new package, or a change in servicing practices?
- Does the product have the same use conditions in the international market as in the home market?
- Does the product require personal after-sales service and, if so, can you provide it in the prospective market?
Next Week’s Extract
In our next extract from Laurel’s new book, we will take a look at three different types of export business plan. If you enjoyed the extract and want to find out more about the things to consider when writing your export business plan, Laurel Delaney’s book is available for purchase on Amazon, Barnes & Noble and Apress.