After much deliberation, you’ve decided that exporting is for you. Even top management is excited over the unlimited sales opportunities exporting offers. The commitment is strong, so you have everything going in your favor. At this stage, you’ve already selected your best-prospect export product or service by analyzing your “Pros” and “Cons” on your exporting worksheet and assembled your (crack) export dream team. Now, to get organized for the export trial run, you must do the following:
1. Set up an export “propaganda” file. The first thing I did to learn everything there was to know about exporting was visit online governmental resources. One dashboard worth exploring is the Small Business Administration’s (SBA’s) Office of International Trade, where online export primer courses, loan programs and guides are available for free to give you the skills, insights, and strategies to expand sales globally. Another is The Federation of International Trade Associations. These visits offer a phenomenal amount of useful information.
This first step is essential for success. Take, for example, a book called Breaking Into The Trade Game: A Small Business Guide to Exporting – 4th Edition (downloadable in parts or in its entirety), which has a table of contents featuring Making the Export Decision, International Marketing Plan Workbook and Making the E-Commerce Connection, to name three of more than 10 sections (including a Spanish-language version).
For service business owners, download the Introduction (PDF) to see how service exports are booming, but take note that the stats are from 2007. Exports have slowed since then due to our global economic woes.
The SBA breaks down what could be complex information into an easy-to-understand format. After I read this book, I knew how to export! But, you can’t stop there. You must forever gather new knowledge in exporting and build up your propaganda library. Contact your Department of Commerce, International Trade club, business and service organizations and Agency for International Development — and ask questions.
And, while you’re on this journey, collect appropriate data relative to your exportable service/product. Do not be afraid of what you don’t know. Rather, go at it with the notion that what you find out can only help you successfully execute your export trial run. Remember, the top guns will be looking over your shoulder for results, so the more data you collect, the better your ammunition for presentation updates.
Visit your local university or public library. Plan on spending hours there. Ask a librarian for assistance and dig, dig, dig. There are so many customer directories there it can be overwhelming. Plan on re-visiting on a weekly basis until you feel confident about what you’re doing. Lastly, go to a great newsstand or bookstore (online or brick and mortar) and scan recent editions of international magazines — one that comes to mind is WorldTrade — and buy one that looks interesting. Subscribe if it’s affordable.
Lastly, utilize the Internet. That is what it’s there for. You gain a wealth of information by reading timely international how-to guides or articles. All these suggestions should familiarize you with exporting and help build a strong sense of what you should do next.
2. Learn how to exploit your product or service. You can utilize the unique support services of export promotion agencies (EPAs) or export promotion organizations (EPOs). They help you promote your product or service overseas. This step can move you quickly and inexpensively into the international marketplace. They can assist in the following areas: how-to educational sessions, assessment of product or market opportunities, export sales leads that match your product or service interests.
EPAs and EPOs can also create awareness of your product or service among foreign buyers with their target export industry programs. They even go so far as to bring foreign buyers to your door by a ’sourcing’ method. Get in touch with them soon. Work hard in cultivating the relationship. EPAs and EPOs can be found through a Google search for “export promotion agency” or “export promotion organization.” You can also familiarize yourself with them by reading “Export Promotion Agencies: What Works and What Doesn’t” by Daniel Lederman, Marcelo Olarreaga and Lucy Payton.
Get started with an EPO at the U.S. Commercial Service to help you find a buyer, partner or agent; promote your products or services to international buyers; and obtain credit reports to evaluate buyers before you make a sale — all without traveling overseas.
3. Assess worldwide demand to maximize your return. Your propaganda file lists all kinds of organizations that can assess worldwide demand for your product or service, but at a steep price. To save dollars, I recommend you, again, visit our Department of Commerce International Trade Administration, and find out how to assess the potential on your own.
If you can’t find out how to do this even after you’ve researched and asked the right questions, then consider spending some money to come up with answers. But do this well after you’ve exhausted all other options. What you should be looking for are directories: Imports from the U.S., Exports from the U.S., HS (Harmonized System)/Schedule B codes for your product or service, and so forth. These are all available online as well. These listings give you an idea of what product/service is moving from where to where and in what quantities. You can do your own search.
Don’t let these things scare you — no matter where you go there are people willing to help you (your freight forwarder, transport expert or your trusty UPS contact can assist). When you’re through with your assessment, you’re ready for the next step.
4. Select a target market. You will focus your efforts completely on the target market during the trial run. Select the country where you see the highest market potential and then keep another equally opportunistic country selection on the back burner. Look at export trends and demand for your product or service offering in your target market. After six months, you might want to reorient yourself and take a new approach. You’ll be glad you did your homework when that happens.
Mind you, I’ve kept this target market selection extremely simple because most people don’t understand or don’t want to know about weighted market potential index assessments, recognizing that there are undoubtedly some market indicators that are given greater weight than others. I look at country risk assessments, World Bank Ease of Doing Business Rankings, and World Trade Data (more trade data here) to get a good grasp of market potential.
If you have the time and are comfortable with this approach, talk to your global guru and use your calculator accordingly to get specifics here. Otherwise, go with your instincts on the target market that affords the biggest gain for your firm in a relatively short time.
5. Choose direct or indirect marketing method. Do you want complete control or to let an established trading company do the work for you? Direct is you go it alone: sell your product/service directly to foreign customers, set up your own distribution, and establish payment terms. Indirect is using an export trading or management company such as Mitsui & Co., Ltd. that buys your product, exports it to the foreign market, and controls the introduction of your product into the market. Your sale is a domestic one.
My recommendation is to go through a trading company specialized in the specific geographic area of your Target Market No. 1 (in the case of Mitsui & Co., Ltd., it would be Japan) and at the same time go direct in a very aggressive way to your Target Market No. 2 — or vice versa. This gets you off to a running start, provides a good training ground and lets you compare results. Make your decision on the basis of comfortableness and ease-of-execution.
6. Realize your strengths and weaknesses. Although a very boring task, it’s nonetheless a very important part of the trial run. You can’t play up your strengths if you don’t know what they are, and you can’t strengthen your weaknesses if you don’t know your weaknesses! To effectively identify your strengths and weaknesses, ask these questions: What’s good or bad about your management, product or service, market selection? Confront the issues and be honest. If you have a clear understanding of your strengths and weaknesses, you are in a position to determine what is necessary to achieve a higher state of preparedness.
7. Determine sales expectations. This is a tough area. Again, you can go to your global guru and put your HP to work, but I recommend, for a first-time exporter, a simpler approach. Look at your total sales and pick a realistic percentage of that total to become foreign sales. For example, your company has $500,000 in sales, and you’d like to have that total increase by 5% to represent foreign sales within a year. That’s $25,000. Then break it down into more manageable weekly, monthly and quarterly rounded numbers: $525/week, $2,100/month or $6,300/quarter. Then ask yourself, based on a zero sales base right now, can I realistically achieve those projected sales levels within a year?
Only you know. Keep in mind, though, that you could achieve foreign sales as high as 30% of your total in a year if you have a really hot product, are aggressive and know what you’re doing! Review your resources and your company’s strategic direction. Incorporate these elements into your decision. Once you decide, make sure your top guns are with you on it all the way.
Congratulations, you have finalized your trial run plan. Take a break because in the next post, we’ll talk about closing your first deal.
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About the Author: Global business expert Laurel Delaney is the founder of GlobeTrade.com. She also is the creator of “Borderbuster,” an e-newsletter, and The Global Small Business Blog, all highly regarded for their global small business coverage.