Let’s Talk Export…preparing your business for export

As with starting a new business, the decision to enter the overseas market is a big one.  Such a decision signals a company’s readiness to take on the myriad tastes and preferences of a new market.  However, prior to making the leap, some critical steps are required to ensure that the decision is not only a profitable one but also beneficial to building the company and its brand in its new location.   This initial and vital first step is to prepare what is called an export plan.

An export plan is a guide for the development of an international business, which is essentially what the decision to export amounts to.  It consists of identifying markets, setting goals for that market, planning activities that build and enhance the company’s position and the product in the market, proposed ways of achieving set objectives, required resources – whether financial or capital, and expected outcomes.

Writing the export plan is a demanding process which is synonymous with scripting an entirely new business plan; however, a good export plan properly executed can propel a small manufacturer from virtual obscurity to unprecedented international recognition as a producer of high quality, top-tier products.

Image courtesy of www.exnnutrition.com

Before settling to write the export plan however, it is important to undertake several pre-planning tasks. These include conducting market research and creating a marketing plan.  Market research firstly helps the company to ascertain whether or not a market exists for its product.  The research further identifies where the market exists, how the products will get to the market place, at what price, and identify competing and substitute products in addition to other relevant information.  The marketing plan on the other hand, helps in the selection of distribution channels, packaging and selecting the type of promotional programme which will be engaged to spark interest in the product offerings.  Critically though, an export plan must address the market entry approach i.e. methods of market entry, and trade regulations i.e. the laws associated with exporting to the selected country.

The market entry approach and especially maneuvering the trade regulations of the overseas markets are quite possibly the most complicated portions of the export plan.  The market entry approach helps to determine the size of the investment required.  A company may either choose to export directly or indirectly.  An indirect exporter operates through an intermediary and requires less marketing investment but the business loses substantial control over its products and the marketing process as well.  This can be a frustrating process for a local manufacturer whose total dependence on the intermediary can misrepresent the image of the product in the overseas market and cause irreparable damage to the brand.

While it requires much more financial and capital investment, direct exporting affords the company better control.   The firm can choose to open a franchise, enter a licensing agreement, manufacture by contract or “piggyback” on an overseas company’s products.  Whichever method is selected the company will be able to capitalize on economies of scale locally thereby affording better control over its ability to deliver on time, and distribution.

Significant too, are the regulations associated with entering the new market. Most foreign countries have individual standards and import certification requirements on things like: product standards, certification requirements, electricity regulations, packaging and recycling laws and quality expectations.

If food or food based products are being exported, it is also important to get familiar with the requirements to enter countries such as the United States, the United Kingdom and Canada.  As the US is such a huge and sought after market, businesses should familiarize themselves with the Food Safety Modernization Act of 2011.  It requires all entities producing, handling, transporting, importing or distributing food to meet heightened food safety requirements in order to trade in that country. 

The Act further requires that local manufacturers among other things had to plan, test and document their food safety controls, document and update their plans every two years or sooner if the company changed suppliers, processor or ingredients and implement acceptable traceability and recall procedures which would enable to entities to rapidly trade back from where a product was received and tracked forward to where it was sent.

For all businesses that seek to export, from whichever country in the world, there are also requirements for an export license.  It may however be called by different names in different jurisdictions.