Some pointers for exporters
Imagine you have the hottest selling widget your home market has ever seen. How many months do you give yourself to bask in the dominance of your brand, before you start freaking out over hungry competitors gobbling up your revenue?
Let’s put it this way – don’t get too comfortable. Your success in your home market is reason enough for you to expect a challenge. And the bigger your success, the more aggressive your competition is likely to be.
Larger rivals may appear with the economy of scale, pressuring you on price. As the once hottest selling widget maker in town, you have to innovate to compete. It is at this point, when you are most vulnerable, that the temptation to open channels further afield will be at its strongest.
It makes no difference if your company grew up in the suburb of a larger market, or on a small island, remote from potential opportunities across cultural and geographic divides – at some point you may see export as your only option to grow your revenue.
It isn’t rare for an export consultant to meet a client that has already begun selling overseas, only to regret the decision. Auckland-based export consultant Katabolt, together with William Buck has seen its share of companies that have taken what seemed like the most expedient path to export, only to find they’ve wasted time, money and resources getting to the wrong place.
“We’ve seen companies that have gone into China or Southeast Asia, and are currently finding it a challenge,” says Chris Boys, founder of Katabolt . “They may have had a government or department entice them, only to find it difficult in that market. It doesn’t mean you’ve failed. It’s just that you will need a ‘go/no-go to market’ assessment to see if that market you’ve entered is actually right for your business.”
There are a few key areas to consider when you’re thinking of exporting, before you get to that point.
Don’t jump the gun – Companies sometimes are so eager to seize a perceived opportunity, they go before they’re ready. A company has to have its business and production processes in place before it can even think of going overseas.
This means that the company is able to scale their operations to meet the demand, to say nothing of the cost or of delivering to a sudden influx of overseas customers. Arran Boote International Tax Director of William Buck comments “The early pressure then comes on working capital, managing the increase in stock and debtors and fx exposure”. When you have that under control you also need to allow for logistics, customer support, accounting and management time.