Internationalization still scares small companies and some have to overcome psychological limitations, come up against cultural and language barriers, and overcome obstacles related to their internal financial capacity. Be that as it may, in the current highly competitive conditions, it is thanks to international opportunities that numerous companies are further able to preserve their strategic focus and at the same time improve their profitability and grow their markets. In this article you will find some tips for a successful first sale abroad.
1. Settle upon your top-notch markets and eliminate shoddy choices
Selecting an export market is an important decision for any business. It involves researching potential markets, assessing the risks and rewards, and making a strategic decision about which markets to enter. It allows you to focus your marketing efforts and resources on a specific country and customers who are most likely to purchase your products or services.
Research is the foundation of successful market selection. Learn as much as possible about the potential markets you are considering. This includes analyzing the market size, growth potential, competitive landscape and customer needs. In addition, evaluate the potential risks and rewards of entering each export market. Consider the potential financial returns, potential business partners, legal requirements, and any political or cultural challenges you may encounter. Once you have assessed the risks and rewards of each potential market, make an informed decision about which markets to enter.
And most importantly, establish a list of countries you consider as No-Go countries for reasons such as difficult to access, high saturation, political instability, and high protectionism. For each of us, companies, the reasons will be personal and different.
Prime Target’s Market Ranking Report can help you evaluate the market potential of 5, 10 or 20 countries simultaneously, and identify new export markets with the highest potential. This comprehensive and personalized Market Ranking Report can minimize risk, saving time and money, as well as identify new business opportunities abroad.
2. Develop a in-depth export plan
Develop a comprehensive export plan that outlines the steps you need to take to successfully enter the export markets. It validates the feasibility of your project and plans how to launch you on several export markets or on a new market with all the cards in hand. The export plan is an essential reference document to make the right choices for your export strategy and convince your financial partners to support your project.
This export plan generally contains the following elements.
Strategic diagnosis : it is an analytical process used to assess the current situation and performance of an organization. It typically includes an analysis of internal and external factors that can affect your organization’s performance, as well as an assessment of its strengths, weaknesses, opportunities, and threats. Strategic diagnosis is usually the first step in the strategic planning process, as it provides a comprehensive overview of the organization and its environment.
Key markets description and risk analysis : It involves assessing identified potential markets for your business, and then evaluating the potential risks associated with entering each market. The process includes validating the market size, potential customers, competition, cost of entry, and regulatory environment, among other factors. This analysis is used to prioritize which markets your business will target and to identify any potential risks that could negatively impact the business.
Business model framing : Export business model framing is the process of constructing a model that defines the purpose, scope, and activities of your export business. This model is used to identify the business’s value proposition, revenue sources, and target markets internationally. It helps you to better understand their operations and create strategies that will maximize their potential. It also allows businesses to identify potential risks and opportunities.
Export financial forecast : Your financial forecast must include projections of key financial metrics such as revenue, expenses, cash flow, and profits, as well as more detailed metrics such as gross margin, operating margin, and return on investment. Your forecasts can also include projections of balance sheet items such as assets, liabilities, and equity. This document is typically used by investors and lenders to evaluate a company’s potential for investment and credit.
If you want to create your own export plan, here is a template from the New Zealand Trade & Enterprise.
3. Choose the right partners
A rigorous selection of a partner to enter a new export market is a chief factor for international success. Well-off companies strive to identify partners with the right fit in terms of business strategy and investment to create solid foundations that underpin their business’ international development. It is essential to pay particular attention to this selection because it represents many consequences for your business. The stakes of a good selection of your partners are economic but also of brand image.
Using intermediaries such as commercial agents or distributors is a good way to grow your revenue and profits internationally. The distributor and the commercial agent have similar objectives: to sell your product abroad. However, the business relationship is different. You can start by thinking about your own needs and expectations with respect to an intermediary. This will help you paint a picture of your ideal partner.
Also, make sure that you fully understand their:
- Marketing strategy
- Level of comfort with the rules and standards that apply to your business
- Financial viability
- Reputation in the market
I suggest you read our article: How to choose an international distributor ? To ensure the best possible choice of an international distributor, we share with you the key steps of the effective selection process.
Last advice, establish clear responsibilities and key objectives for each party and put in place performance related clauses in your contract. You can not afford to have a partner which does not deliver.
4. Obtain the necessary export licenses
Make sure that you obtain all the necessary export licenses and permits to ensure that your exports are legal. Export licenses are documents issued by a government agency authorizing the export of certain goods or services from its jurisdiction to another. They are often required for certain types of exports and can vary from country to country. Depending on the type of goods or services being exported, the government may require that you obtain an export license in order to legally export them.
Chemicals, medicines, works of art, cultural goods and dual-use goods are among the restricted goods. Less obviously, other items that require an export license include video game consoles or products containing kerosene such as wax crayons and candles. An export license can also be required for the export of certain services, such as consulting services.
5. Familiarize yourself with international payment methods
Familiarize yourself with different international payment methods such as letters of credit, payment through banks, and other payment methods. The most common methods of payment in international trade include:
Cash In Advance : your customer must send their payment for goods at the same time as they send their order: Cash in advance is the most secure method for you as an exporter because it ensures full payment before shipment of the goods.
Open Account Terms : the goods are shipped and delivered before payment is due, which in international sales is typically in 30, 60 or 90 days. Be careful with this payment condition, as it should be used with lots of caution and only for partners you know and trust.
Consignment : is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. Very rare and undesirable method unless the exporter and the importer are part of the same company, group of companies etc
Documentary Collection : is a method of trade finance and consists, for the exporter, of instructing your bank to obtain payment for the importer in exchange for bank documents. Documentary collection is less common than advance cash payment and open account terms, particularly used in countries with weak enforcement of contracts.
Letters of Credit : is a procedure by which a bank commits to their client (importer) to pay the exporter, as the latter will have submitted documents complying with the conditions of the documentary credit. Through its issuance, the exporter is assured that the issuing bank will make a payment to the exporter for the international trade conducted between both the parties.
6. Export compliance or understand the customs and export regulations
Understand the customs and export regulations of the target market so that you can properly declare and classify your goods.
The customs and export regulations of a country vary by region and are subject to change. It is important to research and understand the specific regulations of the country you are exporting to, as well as any applicable international laws. This includes researching tariffs and licensing requirements, as well as any applicable taxes or safety regulations. Additionally, it is important to understand the local language and culture. To be in order to ensure you are compliant with any applicable laws and regulations.
To know the customs rates applied, first find the Harmonised System(HS) code that fits your product. As a next step, we recommend using the Market Access Data platform of the International Trade Center. You just have to enter the country of export and import as well as the HS code related to your products.
For example, some countries are more restrictive than others in controlling the entry of alcoholic products into their territory. It is therefore essential to be informed of these national specificities. Other examples of international compliance: phytosanitary certificate, back label and certificate of origin for China; a specific analysis stating the metals contained in the wine for Peru; the corresponding TARIC code on each line of the commercial invoice for Greece.
7. Invest in marketing
Invest in marketing activities to promote your exports in the target market. First develop a comprehensive export marketing plan that outlines your market research, target sectors, and marketing strategy. Conduct an analysis of competitors and develop an effective adapted pricing strategy. Depending on your strategy and products you can invest in marketing materials. It can be brochures, product catalogs, and flyers, to help promote your product or service overseas. At the same time you can establish relationships with local distributors and partners in foreign markets to help increase your presence and reach. Don’t hesitate to attend international trade shows and exhibitions to meet potential clients and collaborators.
As our world is becoming more and more digitalised, utilize online advertising and other cost-effective digital marketing techniques. As many exporters are selling online, consider utilizing search engine optimization (SEO) to help make your website more visible to potential customers in other countries.
Regarding digital communication, use social media platforms to reach overseas customers. On average, according to Statista, global internet users spend 2 hours and 27 minutes on social media per day, though trends differ widely by country. In Nigeria and the Philippines this time is 4 hours on average while in average Japanese people spend 1 hour on social networks. CEOs who want to succeed should concentrate on figuring out how to communicate depending on the target market.
Concerning adaptation to the market you enter, consider setting up a website specifically for international customers. Invest in translation services to help communicate with customers in other languages.
8. Monitor your exports
Monitor your exports regularly to ensure that you are meeting the needs of your customers and complying with the export regulations. You can monitor your exports by tracking the shipments as they travel from your warehouse to the destination. This includes tracking the progress of each shipment, monitoring the status of orders, and keeping an eye on any potential delays. It’s important to set realistic expectations for customers, allowing them to plan properly for when their goods will arrive. You can also use software and export tracking tools to help you monitor your exports. These tools can provide you with real-time insights into the status of your shipments, helping you stay on top of any issues that may arise.
Some of these software can also help you with export regulations by generating some of the documents needed to send your products abroad.
Key Takeaways
One of the key takeaways from this short article should be, your company should go international. It is thanks to international opportunities that the companies are further able to preserve their strategic focus. At the same time they improve their profitability and grow their markets. To make a successful first sale abroad, begin by selecting your top-notch market, develop a comprehensive export plan and obtain the necessary export licenses. At the same time, familiarize yourself with international payment methods and figure out the customs and export regulations. Next steps are to prepare a budget and invest in marketing to adapt your protection to the targeted market. As soon as the first sales arrive, don’t forget to monitor your exports and aim for continuous improvement and performance.
Prime Target can accompany you in your international business project, and assist you in market potential evaluation. Prime Target’s Market Ranking Report can help you evaluate the market potential of 5, 10 or 20 countries simultaneously, and identify new export markets with the highest potential. This comprehensive and personalized Market Ranking Report can minimize risk, saving time and money, as well as identify new business opportunities abroad.
