Step-by-Step Guide to Exporting - Beyond the Border: Getting Started

"First of all, do your homework and know yourself. Realize that it is a commitment for a long, long term. Know your strengths... Do your research on your product or your service and then go for it." Exporter

Page Index

• Exporting: What's in it for you
• Are you ready?
• Evaluating your export potential
• The TCI Export quiz: Are you ready?

Exporting: What's in it for you

Business has gone global. That's hardly news anymore, but it's remarkable nevertheless - because, for the first time in human history, the world marketplace is open all day and every day, unrestricted by distance, technological barriers or country of origin. The entire world is within our reach in ways that weren't possible before. Like any business venture, of course, entering the arena of global trade presents both opportunities and challenges. At first, you may not even be sure how exporting can help your company, or what the drawbacks of such a project may be.

Experienced exporters, though, have a pretty good idea of both the benefits and problems of international trade. For example, they know a business can gain a lot from a successful exporting venture, including:

• Increased sales - if domestic sales are good, exporting is a way to expand your market and take advantage of demand around the world. You may also find foreign niche markets where your product is rare or unique.
• Higher profits - if you can cover fixed costs through domestic operations or other types of financing, your export profits can grow very quickly.
• Economies of scale - when you have a larger market base, you can produce on a scale that lets you make the most of your resources.
• Reduced vulnerability - if you diversify into international markets, you avoid depending on a single marketplace. A domestic downturn, for example, will be less damaging if you have other markets where demand remains high.
• New knowledge and experience - the global marketplace abounds with new ideas, approaches and marketing techniques. You may find them very successful in Canada, too.
• Global competitiveness - foreign companies are entering Canadian markets and Canadian companies are going foreign. The experience your company gains internationally will help keep you and Canada competitive in the global marketplace.
• Domestic competitiveness - if your company succeeds in the global marketplace, it means your product can compete with the best the world can offer. This helps you succeed at home and ensures your resilience when faced with foreign competition in Canada.

Of course, there are also challenges that accompany these benefits. The good news is that you can surmount them with careful preparation and planning. They include:

• Increased costs - an exporting venture means you'll have to meet many short-term costs, such as extra travel, production of new marketing materials and perhaps hiring additional sales staff. And you may have to modify packaging, or your products or services, to adapt them to markets abroad.
• Level of commitment - it takes time, willingness, effort and resources to establish and maintain yourself in foreign markets.
• Staying in for the long haul - while exporting holds great economic promise for most companies, you can expect months or even several years to pass before you see a significant return on your export investment.
• Cultural differences - you'll need to familiarize yourself with the differences in language, culture and business practices in your target market. If you don't, you risk inadvertently offending your potential customer and losing a sale.
• Paperwork - you'll have to get used to it. Both Canadian and foreign governments require a lot of documentation from exporters of products and services.
• Accessibility - you have to be easily available to your foreign clients.
• Competition - you must be sure you're thoroughly familiar with the competition in your target market.

Source: Adapted with permission from the Forum for International Trade Training, Going Global.

Are you ready?

What makes an export-ready business? Simply put, the business has a marketable product or service as well as the capacity, resources and management commitment to compete on a global scale. The trick is to figure out whether this is true of your company - and if it isn't, how to make it happen.

Your first step is to think about the resources and knowledge your business already has. To begin, consider:

Your expectations - do you have:

• clear and achievable export objectives;
• a realistic idea of what exporting entails;
• an openness to new ways of doing business; and
• an understanding of what is required to succeed in the international marketplace?

Human resources - do you have:

• the capacity to handle the extra demand associated with exporting;
• a senior management committed to exporting;
• efficient ways of responding quickly to customer inquiries;
• personnel with culturally-sensitive marketing skills; and
• ways of dealing with language barriers?

Financial and legal resources - can you:

• obtain enough capital or lines of credit to produce the product or service;
• find ways to reduce the financial risks of international trade;
• find people to advise you on the legal and tax implications of exporting;
• deal effectively with different monetary systems; and
• ensure protection of your intellectual property?

Competitiveness - do you have:

• the resources to do market research on the exportability of your product or service;
• proven, sophisticated market-entry methods; and
• a product or service that is potentially viable in your target market?

Evaluating your export potential

Can your product or service find a worthwhile market outside Canada? Getting this right is crucial - if there's no demand for what you're offering, you'd obviously be unwise to proceed. But how do you come up with the answer? Here are some factors to consider:

Customer profile

• Who already uses your product or service?
• Is it in broad general use or limited to a particular group?
• Is it popular with a certain age group?
• Are there other significant demographic patterns to its use?
• What climatic or geographic factors affect the use of your product or service?

Product modification

• Are modifications required to make it appeal to foreign customers?
• What is its shelf life? Will this be reduced by time in transit?
• Is the packaging expensive? Can it be easily modified to satisfy the demands of foreign customers?
• Is special documentation required? Does it need to meet any technical or regulatory requirements?

Transportation

• How easily can it be transported?
• Would transportation costs make competitive pricing a problem?

Local Representation

• Does it require professional assembly or other technical skills?
• Is after-sales service needed? If so, is it available locally or do you have to provide it? Do you have the resources to do this?

Exporting Services

• If you're exporting services, what is unique or special about them?
• Are your services considered to be world-class?
• Do you need to modify your services to allow for differences in language, culture and business environment?
• How do you plan to deliver your services: in person, with a local partner or electronically?

Capacity

• Will you be able to serve both your existing domestic customers and your new foreign clients?
• If your domestic demand increases, will you still be able to look after your export customers or vice versa?

The TCI Export quiz: Are you ready?

Think your business is ready to start exporting? Take the quiz, check your score and be sure.

1. Is your product or service already available?

1. currently in production or being developed
2. at the prototype stage
3. at the idea stage only

2. Is your product or service selling in the Canadian market?

1. selling, and market share is growing
2. selling, but market share is low
3. selling in only one city in Canada

3. Do you have the surplus production capacity or available specialists to meet increased demand for your product or service?

Yes / No

4. Do you have the financing required to adapt your product or service to suit your target market and to promote it?

1. financing is in place
2. financing is being arranged
3. no financing available

5. Is your management committed to sustaining your export effort?

Yes / No

6. Does your firm have a good track record of meeting deadlines?

Yes / No

7. Does your management have experience in export markets?

Yes / No

8. Does your product or service have a distinct competitive advantage (quality, price, uniqueness, innovation) over your competition?

Yes / No

9. Have you adapted your packaging (labelling and/or promotional materials) for your target market?

Yes / No

10. Do you have the capacity and resources to provide after-sales support and service in your target market?

Yes / No

11. Do you have a Free on Board (FOB) or Cost, Insurance and Freight (CIF) price list for your product, or a rate list for your service?

Yes / No

12. Have you undertaken any foreign market research?

1. completed primary and secondary market research, including a visit to the target market
2. completed some primary and secondary market research
3. no research

13. Is your promotional material available in the language of your target markets? (Business cards, brochures, web sites)

Yes / No

14. Have you started marketing your product or service in your target market?

Yes / No

15. Have you engaged the services of a sales representative/distributor/agent, or partnered with a local firm?

Yes / No

16. Have you hired a freight forwarder or customs broker?

Yes / No

Source: Adapted with permission from International Trade Canada, Businesswomen in Trade On-line Assessment.

How did you score?

If you selected "A", or answered "Yes" to 12-16 questions, congratulations! You understand the commitment, strategies and resources needed to be a successful exporter. At the very least, you have the foundation in place to take on the world and succeed.

7-11: Not bad, but there are weaknesses in your export strategy. It may be wise to seek advice and guidance from government experts, export consultants or the international trade branch of your financial institution.

Less than 7: While you may be ready to visit faraway lands, you will need to do a little more homework before you export. Consider getting more help from the sources mentioned in this chapter.