Where to start?
Your export journey may start from behind your desk, may involve your existing customers and also some initial fact-finding trips to test the feasibility of your export markets. Here are six ways to establish if your business can enter into export markets:
- Do desk research. Use the Internet to identify the most suitable trade or consumer shows for your product or service. Save money by simply attending as a delegate, scoping out your competitors’ strengths and weaknesses to hone your own market proposition.
- Book a stand. Once you’re ready to sell, book an exhibition stand at a trade show. Financial assistance is available to qualifying businesses for overseas trade fair attendance from state development agencies such as Enterprise Ireland and An Bord Bia. Consider cutting costs further by sharing stand space with suitable ‘co-opetitors’.
- Use your networks. Leverage your networks and look for opportunities to piggy back on existing customers in Ireland which have overseas operations.
- Contact state development agencies. Your Local Enterprise Office is a good first port of call. Depending on the scale of your business, it may refer you on to Enterprise Ireland, which deals with businesses which can scale into export markets. Typically the more jobs you can expect to create at home, or value you can create for the Irish economy on foot of your exporting activities, the more support you are likely to get from state agencies. Grant aid is available for export activities through a number of Enterprise Ireland programmes. Don’t underestimate the importance of soft supports too, such as export mentors and access to Enterprise Ireland’s offices and contacts overseas.
- Go on a trade mission. Enterprise Ireland hosts numerous trade missions each year. These are typically led by a government minister and aimed at developing markets. Some are sector specific, such as construction in Qatar or education in China. Places on trade missions are by invitation but are open to application from any client company of any enterprise development agency, including Local Enterprise Offices.
- Join a market study tour. Market study tours are an earlier stage alternative, typically organised by Enterprise Ireland for groups of companies in a particular sector, such as ICT. These focus on education, visiting companies in a region and learning about the dynamics of a market.
Check out Enterprise Ireland’s Get Export Ready programme which supports first-time exporters launching their business in overseas markets.
Take online seriously
You need to take your online presence very seriously if you plan to export. Ensuring your products or services are found online by target customers is vital. At a minimum, locally based ‘virtual’ contact details, which may be routed to your Irish operations, are a cost effective initial solution that can give comfort to prospective customers in overseas markets.
However, if you are serious about exporting you need to consider creating localised versions of your website for your target market.
Ensure you have adequate financial resources in place. As you grow exports, your sales cycle lengthens, leading to a longer trading cash flow cycle. Credit terms in regions such as the Middle East, for example, can typically be 120 days. Ensure you have the production capacity to cope with anticipated sales too.
Because exporting can put a strain on cashflow back home, consider export invoice discounting, which can provide you with up to 85% of the value of an invoice – at a cost – up front.
If you plan on exporting outside of the EU, put a currency strategy in place to help you cope with exchange rate fluctuations. It may be possible to limit exposures to currency risk by importing as much of the raw materials you need from the country you are exporting too.
Finding agents or distributors
Decide how you plan to sell, whether through distributors and agents, by getting your staff to commute back and forth to a target market, or hiring personnel in the market.
Finding the right agent or distributor is crucial. Typically a distributor buys stock for reselling and can dictate the price at which it is sold in the local market. With an agent, who may be contracted to work on commission, the producer controls the price at which goods are sold.
To help your cashflow, look for at least part payment from your distributor up front, plus staged payments according to how quickly stock moves off the shelves.
Ideally look for someone who is already handling a similar, though not identical, product or service into your chosen market.
Talk to your agent or distributor about local price points before committing. Work backwards to establish the ‘ex-works’ cost of producing your product, stripping out the distributor’s margin, transportation costs and any tariffs or duties incurred. Factor in shipping or freight costs to assess how these will impact on your competitiveness abroad.
This will help establish whether or not you can afford to sell in a new market. Try not to depend solely on price differentiation as your unique selling proposition (USP) in any new market – someone can always undercut you.