How To Develop An Exporting Plan

Before you rush into an export market, spend some time searching for one that represents the best opportunity for your company. You want a market that represents the least risk and the greatest long-term reward. This article outlines criteria to use when determining an export plan.

Similar Customers

Ideally, you want a market in which customers are similar to those at home. That goes beyond language, customs, and distribution systems. If you normally sell to wholesalers and distributors, for example, you’ll want to sell to the same customers in the new market. If you change your customer base, you’re changing the nature of your business. Hence selling to similar customers is an important criterion for exporting.

Evaluate Market Forces

Success, of course, depends on how high you can price your product or service. Your new competition, established sellers, will lower their prices and keep service high to keep you from entering the market. You must be able to compete directly on price or you won’t survive. And initially quality must be high, because it will be difficult for you to compete on service (though you must try to offer the same level of service you offer at home). It’s riskier to introduce a new product to a market, because you’ll have the difficult task of creating demand. But whether selling a known product or introducing one, investigate end user demand. Distributors and retailers may be enthusiastic, but they may not reflect the true demand. A market will have more potential for sales, growth, and profit if its economy is growing. Look closely at your industry and the factors that contribute to sales in it.

Getting Goods to Customers

Successful exporting depends on getting your product to customers at a reasonable cost. Factors to consider include:

packaging at home for shipping
costs to get your product into a container and getting it to the point of departure
shipping costs
unloading costs at the destination
port or point-of-entry costs
duties or tariffs, taxes, and distribution costs.

Other risks factors to evaluate include:

the tax and regulatory requirements in your target country
business customs
the political situation and, not least,
how you’ll be paid and how you can enforce payment. Best choices: cash on delivery, letters of credit, and credit insurance (if available).

Notwithstanding the above, before you attempt to sell across borders, put your exporting plan in writing. It’ll help you stay on track, gain financing, and encourage commitment. The heart of your plan answers ten questions in great detail:

Why are you developing an export program? This summary offers many good reasons.
What markets do you plan to enter and why? Analyse the pros, cons, risks, and rewards.
What products will you take to the market? Generally, it’s safest to export products with high demand and high margins at home.
How do you plan to enter the market? Make sure you know exactly how your products will end up in foreign consumers’ hands.
What obstacles are you likely to encounter? Research can alert you to some roadblocks, like taxes.
Who’s going to lead the export effort? The CEO must drive the program, but someone must oversee it full-time.
What’s your timing? You’ll need considerable time to become familiar with a market and even more time to figure out how to price your product and to whom you’ll sell.
How will you finance your export program? Besides the usual sources, the government may help.
What are your exporting objectives? Here’s where you come up with numbers. Be conservative; you’ll meet unforeseen obstacles.
How will you keep track of your export program? Do progress reports to record things you’ve learned.

This article has been extracted and modified from Orsino, P.S. (1994). Successful Business Expansion. New York: John Wiley.

George Tanewski is Research Fellow in the AXA Australia Family Business Research Unit at Monash University. Dr Tanewski writes extensively on family business issues and also sits on the board of a prominent Melbourne family business. For further information please contact George Tanewski on 61-3-9903-2388 or george.tanewski@buseco.monash.edu.au
First published: 20 September 2001.
Last updated: 14 October 2004.