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Export Markets: They're Yours for the Taking

December 02, 2008

Want to find high-growth opportunities for your company? Consider exporting. Exports have been growing two to three times faster than the domestic market and, according to the U.S. Small Business Administration Office of International Trade, more than two-thirds of the world’s purchasing power now resides outside of the United States.

Add to this the incredible growth seen in emerging markets such as China and India, and it’s apparent that at least parts of the world may be hungry for your goods and services. Positioned correctly, your company can tap into this huge demand.

Do your research… Develop a plan

Developing a successful exporting business begins with a business plan similar to that of any new business undertaking, but with some different areas of emphasis.

Consider your goals, for example. Why are you pursuing an export strategy? Is it to expand sales, increase economies of scale, improve margins, reduce seasonal fluctuations or for other reasons?

Next, determine what products or services you produce that would be attractive to foreign customers and in what countries. Do your research and be prepared to adjust your product specifications to meet foreign needs and customs. A classic example of a botched exporting attempt by an American company was when it tried to sell conventional boxed cake mixes in Japan only to realize that few Japanese households had ovens!

Understanding foreign markets requires thorough market research into what is needed in which countries, the competitive situation, growth rates and what customers would be willing to pay.

You’ll also need to decide how to reach the target customers. If you wish to export directly to your target countries, you’ll have more control over the process and potentially larger margins when volumes grow. However, you’ll need to acquire expertise in many aspects of export marketing and are likely to incur significant startup expenses.

Many businesses choose indirect exporting through an export management or trading company instead. These organizations can handle many technical aspects of exporting including financing and payment, shipping, and, depending upon the arrangement, helping with actual sales activity.

Whether you choose a direct or indirect approach, the Internet has made overseas sales activity much easier and less expensive. Products can be promoted and orders taken almost as easily as they can domestically. The Internet also has made the mechanics of exporting, such as shipping and tariffs, much simpler.

Get expert advice

Exporting to foreign markets involves a number of risks and hurdles that aren’t present in the United States. You’ll be faced with different legal systems, customs regulations, distribution networks, currency fluctuations, payment methods and tariffs.

Luckily, the federal and many state governments make it their policy to support export activities and make many resources available at little or no cost. The Department of Commerce’s Commercial Service, the Export-Import Bank and the Small Business Administration, along with 16 federal agencies, provide many services through export.gov. There you can find help on specific market opportunities, financing, export business plan development and other topics.

State international trade offices also can provide help through sponsoring overseas trade missions and fairs. Trade associations often have export assistance resources, and export marketing companies can offer significant support.

Consultants also may be valuable — particularly if they’re very familiar with your industry or a region you want to penetrate. Ask your professional advisors and industry colleagues for referrals.

Take the plunge

When it comes to exporting, the timing may never be better. The weak dollar, widespread use of the Internet and exploding world demand all make international opportunities better than ever. Of course, there are risks, as well, but exporting is definitely worth considering.

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