Starting a business requires a good product, a proven market and the willingness to work day and night to succeed. Taking your business global entails all of those steps—plus an understanding of how your product will fit into the marketplace of a country that has a whole different set of rules and cultural norms than you are used to at home.
Before going global, you need to consider five key questions as part of a comprehensive self-assessment. Key considerations include your level of commitment, your product's potential, an understanding of where to start, a sales and marketing strategy and a plan for measuring results.
The good news is that you don't have to go it alone. An excellent starting point for new-to-export (NTE) companies is the U.S. Small Business Administration's Export Business Planner. This free resource includes information and worksheets that will help you to assess your company's export readiness. Another valuable learning resource for NTEs is Michigan State University's GlobalEdge platform, which includes a free self-diagnostic tool. You also can get free advice from international trade specialists at your local Small Business Development Center office.
1. What is your level of commitment to exporting?
For exporters, there really is no stopping point once you go global. Your commitment to export markets and your willingness to constantly fine-tune your strategy need to be ongoing. That means you need a business planning process that identifies potential constraints, and that includes specific goals and objectives as milestones. “Research your overseas markets, stay on top of trends, and find out where your competitors are selling," says Nancy Lowd, a co-author of the SBA's Export Business Planner and an international trade adviser with the Massachusetts Export Center. “And take advantage of all the export-related resources you can access for free or very low cost."
2. What is your product's export potential?
An export readiness assessment, like those offered by the SBA and GlobalEdge, will help you evaluate how ready you are for global markets. As a general rule of thumb, if your product is not selling in the domestic marketplace, it probably won't be any more successful overseas.
Before you start dreaming of Euros and Yen flowing into your bank account, make sure you understand what makes your product sell in the U.S., and how that success can be replicated in whatever export markets you are considering. This will help you develop a blueprint to help ensure you make good decisions about which markets to enter and when.
If you already have appointed a list of distributors overseas, review it often to make sure that they are actively selling your product. Inactive distributors aren't a benefit to your business, and may, in fact, keep better prospects away.
—Nancy Lowd, international trade adviser, Massachusetts Export Center
All of your infrastructure, including your supply chain management, needs to be set up before you start selling and shipping your product overseas.
You also have to know how you're going be paid. For example, if you plan to sell using letters of credit, you need to work with an international banker. You also need to consider shipping and logistics, which means dealing with freight forwarders and customs brokers who understand how to navigate the global supply chain. There are also packaging and labeling requirements, and the need to comply with both U.S. export regulations and the laws of the countries where your product is being sold. So, you'll need legal advice along the way.
3. What is the most effective starting point for going global?
There's a big potential market that exists outside the U.S., and you need to hone it down to one country you think will be the best overseas proving ground for your product.
Attending industry trade shows is often a great place to learn about new markets and make connections with overseas buyers and distributors. Once you have identified potential partners, you have to conduct due diligence. The U.S. Commerce Department's overseas trade specialists are a good starting point for helping assess the credibility of would-be partners.
While some companies are able to start making international sales online, selling through partners in target markets is one of the best ways to establish yourself. “Most small companies export through distributors in key markets," says Lowd.
4. How will you market and sell your product overseas?
If you follow the planning advice from the experts, your business plan for exporting should help you determine how you will market and sell your product overseas. One of your first decisions will be whether you are going to sell direct or through a distributor.
“Research and identify distributors of complementary products in those markets, and approach them to determine their interest in handing your product line," advises Lowd. “If you already have appointed a list of distributors overseas, review it often to make sure that they are actively selling your product. Inactive distributors aren't a benefit to your business, and may, in fact, keep better prospects away."
You also need to consider how you will support your product and ensure that you have viable channels for communicating with both distributors and end-users—potentially in languages other than English.
Another fundamental sales and marketing tool is your website. “The internet is, by definition, global—and your website is your front door to the world," says Lowd. “Is it easy to navigate and understand? If not, make the necessary changes."
5. How will you measure your results from exporting?
Sales are, of course, the most important metric when it comes to results. But keep in mind that opening new markets overseas usually requires an investment of time, energy and money. If you're not ready to allocate resources and take on some level of risk, you probably aren't ready to go global.
But once you do your homework and understand potential risks, exporting can be a lucrative new opportunity for your business. “There is a whole world of demand out there for you to satisfy," says Lowd. “You just have to know what it's going to take to satisfy that demand, and then plan and execute with the right amount of support."
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