Why is this important?

As a first time exporter, there are several factors to consider before entering the international marketplace. Research, planning and finance are the key considerations. 

Exporting is an exciting and challenging stage of your business’s growth. It will enable your business to develop export markets; create opportunities to grow and prosper through increased sales and profits; improve domestic competitiveness; and, reduce its dependence, not only on the Australian market, but on seasonal fluctuations.

It is important that you carefully plan both your market entry strategy and your business growth to ensure success in exporting. Developing an export program takes time, money and resources. You must be totally committed.

What to do

1.  Plan

Rushing into decisions and arrangements can prove costly for you. Therefore planning is crucial. In the planning stage, you need to:

• seek professional advice and guidance and discuss your proposed plans with your bank’s international department
• balance your domestic and export markets effectively
• ensure you have a follow-up service or support
• be certain that your business is capable and ready to export – do you have the production capacity to meet the demand from new markets and sustain offshore trade programs?
• ensure that you can expand this capacity quickly if and when you need to, as time is critical
• ensure it is the right time to export – you must be confident and committed to the exporting venture and ensure that you and your employees are able to service your export markets quickly and efficiently so as to maintain a competitive edge
• make allowances for the fact that you or your employees may be out of the workplace for an extended period of time. You and your employees may need to travel overseas to establish business and maintain relationships
• ensure you have sound marketing knowledge to be able to develop a product overseas. (Tip: never assume that all markets are the same. Conduct market research and be prepared to modify your marketing plan and products to account for differing overseas cultures, languages, customs and regulations.)
• determine which markets you should focus on and have a market entry strategy, for example expanding locally first, before expanding overseas may be more cost-effective (Tip: ask yourself whether you have the production capacity to meet the needs of both your domestic and foreign markets.)
• ensure that you have a unique selling proposition (What needs or functions does your product serve? What makes it different and competitive?) [See: USP Worksheet]
• ensure that you can meet the needs of overseas consumers. The international marketplace is highly competitive and sound customer service is critical. Losing a customer because you can’t fill an order on time could mean you lose them permanently.

Manage export growth

If export is to be a successful long-term growth strategy for your business, it must be integrated into your business growth strategy.

To manage your export growth you need to ensure that you are in control. This means that you don’t have to accept every contract – it must make business sense to you. You might turn down a contract if your business does not have the production capacity to fulfil the order, or because the contract does not position your product the way you want it to be positioned.

Develop a coherent exporting plan

Developing an export plan is critical. It will aid you in focusing your activities as a means of achieving defined objectives. A well-prepared export plan serves as the formal record of the export stage of your business’ growth process and may also assist you in getting finance from your bank.

Your plan should outline:

• your findings relating to the analysis of export opportunities
• the determination of your export capability
• your market research
• your chosen target market
• your market entry strategy and strategy development

NOTE: The Planning section on this website provides a number of documents and worksheets to assist you with developing your exporting plan.

Answer these questions

In developing a coherent exporting plan, you must consider these questions:

• Will you need to modify your product to adapt to overseas markets?
• What countries will be targeted for sales development?
• What is the basic customer profile and what marketing and distribution channels should be used to reach customers?
• What challenge does each market pose and what strategies will be used to address them?
• How will your product’s export sales price be determined?
• What specific operational steps must be taken and when?
• What will be the time frame for implementing each element of the plan?
• What employees and resources will be dedicated to exporting?
• What will be the cost in time and money for each element?
• How will results be evaluated and used to modify the plan?

Consider export markets

As a first time exporter, you are advised to consider markets like New Zealand, Malaysia, Singapore and the Pacific Islands. This is because these countries are English-speaking, have very similar legal and financial structures, share similar time zones and are relatively small markets, with populations currently under four million. Focusing on neighbouring countries is a good way to ensure that freight costs don’t damage your competitiveness.

2.  Research

Remember to start research as early as possible because researching a market may take longer than anticipated. Also, assess each country carefully, remembering that the country you choose will affect your future profitability. A variety of information, statistics and analyses are freely available from sources including the Department of Foreign Affairs and Trade Country Index and TradeWatch or the Export Finance and Insurance Corporation.

Your research must initially involve a thorough analysis of the chosen offshore market, incorporating the size, distribution capabilities and competition for your particular goods or services in that country.

Research will aid you in:

• creating primary and alternative sales approaches to a given market
• making profit projections from a more accurate base and establishing the market’s profit boundaries
• organising marketing activities
• developing critical short/mid-term sales goals
• understanding who your customer is – their needs and resources
• understanding the products that are essential for your potential customers operations or activities
• determining whether or not the customer can afford your product
• determining where best to create demand for your product
• competing effectively in price, quality and delivery
• pricing the product so as to assure a profit
• determining whether the same product is provided by competing businesses
• determining the general economy of your product area
• understanding the areas within your market that are either in decline or growing
• recognising potential agents, distributors or partners.

Know what to research?

• cultural customs, language barriers and religious activities which may impact your business activity (Tip: the more you prepare for the cultural differences in the new business market the better equipped you will be to adapt to situations and understand the different negotiation styles and different customs.)
• the assistance and grants available to you– both federal and state governments provide a number of financial assistance programs that you should investigate
• the economic and social profile, so as to gain a sound understanding of the marketplace
• possible import duties on the product
• local taxes such as sales tax on the product
• cost of shipping or airfreight
• foreign market and government regulations such as quarantine and labelling standards
• consumer protection rules
• product standards
• current selling prices
• other barriers to trade and importing

Visit your 'export' country

As part of your research strategy, a personal visit to the country will help you gain first-hand knowledge of its special characteristics. You will be able to identify the opportunities and the competition, decide which methods of selling and distribution to use and determine whether to sell through a distributor, your own foreign office or a joint venture.  This last option is an important consideration because it determines the risks you take and the amount of investment you expose yourself to.

It might help to exhibit your product or service in a tradeshow in the target market – this approach gives you an opportunity to trial your product consumers, and meet potential distributors and retailers. This information will help you develop an effective market entry strategy.

3.  Finance

As a first time exporter, you must ask yourself whether your business has the financial capacity to develop an overseas market, because breaking into a new export market can pose risks and expenses for your business. It is recommended that you consult your bank’s international department.

Key areas to consider are:

• Working capital – Producing export orders increases your need for working capital. Banks and financial institutions offer pre and post-shipment finance facilities to meet working capital needs.
• Marketing costs – Export sales development involves market research, overseas travel, research and development, communications, freight and buyer visits (Tip: Austrade’s Export Market Development Grants (EMDG) program provides grants for this expenditure.)
• Financing the sale – Your buyer may require credit terms that place pressure on your finances and expose your business to the risk of non-payment or default. There are several ways to mitigate these risks.
• Exchange rates – Pricing your goods or services in another currency exposes you to exchange risk if there is an adverse movement of rates against the Australian dollar. Banks and other financial institutions offer services to help offset that risk.
• Pricing structure – You will need to develop an international price list in order to develop appropriate and competitive pricing. When framing your price structure you need to consider buyer credibility, your competitor’s pricing and terms; and whether your competitor receives government assistance.  Talk to your accountant about marginal costing and any tax concessions available.
• General expenses – These can fall into a diverse range of areas such as airfares, accommodation, taxis, car hire, entertainment, visas, advertising, sales promotion, new brochures and literature, training of overseas sales agents, setting up of joint servicing offices, offshore exhibition venues, translators and insurance.

Consider miscellaneous costs associated with exporting

You must predict the financial implications of local government regulations, import barriers, competitive analysis and supply chains. Product adapting costs might also arise from the preparation and publication of translating manuals, bi-lingual packaging, samples, showbags/gift bags etc.

Other financial considerations can include the margin structures around wholesaler/distributor/retailer arrangements; the possibilities that you may need to upgrade your production capabilities to cope with international growth, or modify your existing products or services; freight and logistics charges; pre-shipment and post-shipment costs; and costs of credit insurance, performance bonds and exchange rate management.

Financial tips

Key tips to note are as follows:

• familiarise yourself with international trade terminology
• be wary of buyers who insist you match competitor’s financial terms
• avoid open account terms
• factor in the extra financial costs that delays may cause
• consult experienced exporters in networking groups
• remember that credit checks and credit insurance are critical
• familiarise yourself with e-trading and electronic payment techniques
• develop a realistic cash-flow model and budget for modest export revenues during the early stages of export market development
• forecast and factor in the best and worst case scenarios

See how it's done

Case study

Organic and gluten free bakery

The organic and gluten free food market is growing quickly in Australia and throughout the world. The development of bread products that meet these dietary requirements and consumer tastes has proven to be difficult, but the Old Time Bakery in Yagoona, NSW, is now producing a bread that is both organic and gluten free.

Developing the right mix took up bakery owner Joseph Nehme's weekends for three years, but the tannour (flat) bread has been taken up by the Australian market immediately. The company's whole range of tannour breads, which includes certified organic wheat, lactose and yeast free products, is distributed by Dallas International to Coles and independent supermarkets, David Jones, restaurants and health food shops throughout Australia.

Capacity limitations had prevented Nehme from expanding into international markets, but after receiving strong interest from New Zealand and Asian retailers at gluten free food shows and realising the breads would have international appeal, Nehme moved to larger premises and purchased new Sabitech machinery which allowed him to capitalise on international opportunities.

Having never exported before, Nehme sought advice from Ian Bennett, senior manager, Australian Business International Trade. "Ian helped me with all the paperwork," says Nehme. "He also helped me get past other problems that popped up such as sourcing the type of pallet we could use under quarantine regulations."

Ian Bennett also helped Joe Nehme develop marketing materials to be used in New Zealand and worked with the company to identify the best way to freight the products.

"Ian's knowledge made it much easier to export," says Nehme. "Now we have an established contact we can handle everything ourselves, but we could not have started as well as we did without Ian."

Taking advantage of the changes to the TradeStart program, Nehme has already re-signed and is continuing to work with both TradeStart managers and Austrade advisers. "We want to expand further into the New Zealand market by getting into supermarkets and we are looking for new markets as well," says Nehme.

Mr. Nehme has attended a trade show in Germany and he is hopeful of entering European markets where there is a strong demand for organic and gluten free products that have been certified by Australia's leading industry groups.

Where to go for help

Do it yourself

The Export Marketing Development Grant (EMDG) – is provided by the Federal Government to assist you with your export marketing and promotional costs. Up to $150.4 million is provided annually to SMEs and it has been estimated that an additional $12 in exports is generated for every grant dollar.

The EMDG is a retrospective reimbursement program which refunds a company up to 50% of their export marketing and promotional costs, over $20,000. To see if your business is eligible, visit Austrade.

Tradex – is an Australian Government initiative which provides up-front relief to you via an exemption from customs duty and GST on imported goods intended for re-export or to be used as inputs to exports. To learn more about the Tradex scheme, visit AusIndustry.

Export Concessions: Duty Drawback – this is designed to assist you in obtaining a refund of Customs Duty paid on imported goods that are subsequently exported. For more information visit the Australian Customs and Border security service.

Export Guidance – Australian Business Consulting and Solutions  and TradeStart offer a free range of services designed to assist you in developing your business overseas and in making your first export sale.

The New Exporter Development Program (NEDP) offers:

• advice and information on export development
• coaching
• a review of your export capability and an evaluation of your export readiness
• identification of suitable target markets
• guidance with international marketing strategies and business plans

Once a market has been selected the program will offer:

• briefings on local practice and business culture
• appointments with appropriate business contacts
• help with participation at international exhibitions and trade fairs
• assistance on the ground in foreign markets

Ask an Expert

Do you have a question about the above information, or need to know more about sales and marketing? Send us an email