Lesson 11: Tapping a Global Marketplace
What You’ll Learn: Most of your customers live in countries other than the U.S., and 75% of the buying power is overseas. This lesson will walk you through the ins and outs of exporting, from planning to execution and how to measure success.
Tapping the Global Marketplace (continued)
Developing a Plan
An export plan can give you a complete picture of what you’re getting into and serve as a guide in executing a successful export strategy. This plan will define your specific objectives, determine your implementation schedule and identify milestones for success. It will also serve as a roadmap for your team going forward.
In developing your plan, remember that 59% of U.S. exporters do business with just one country, predominantly Canada. You don’t need to market to the whole world, especially as you start out. Choose a single market and use it as a sales and learning opportunity.
There are four key steps in developing an export plan: 1) identify the product or services to be exported, 2) conduct market research to find targeted export markets, 3) decide on a pricing strategy for that market, and 4) define a strategy for finding buyers.
- Keep your plan simple, especially at the beginning. Your plan will become more detailed over time as you gain knowledge of the market and its potential. Don’t feel a need to make it overly complicated as it will lock you into a course that may not be correct.
- Keep it flexible as a management tool. Objectives will change as you measure actual results and make adjustments to your export strategy.
- If you are selling directly to a specific end-user in another country, you want to take the time and effort to create a very detailed document to guide you in that relationship.
Return to Main Office
As you start to develop a plan, you want to answer these questions for each market you plan to enter. Here’s a sample plan to guide you.
- What products or services are going to be exported?
- What modifications, if any, do they need to be export-ready?
- Is an export license needed?
- Which country or countries are your targets for sales development?
- What are your basic customer profiles, and what channels are you going to use to market to them and distribute through?
- What unique challenges could you face, and what are the strategies to address them?
- What specific operational steps need to be taken, and in what order?
- What is the timeframe for implementing each element of the plan?
- What human and company resources need to be dedicated to your exporting strategy?
- What is the cost in terms of time and money for each element?
- How will you evaluate success and when will you modify the plan if targets are not met?
A deeper dive
Let’s take a quick look at some of these questions and what you should consider for each.
Product or Service
- What need does my product or service fill in the market(s) I am targeting?
- What modifications need to be made to sell my product in that market?
- Do I need any special licensing or certifications from the U.S. to export or the buyer’s country to import?
- Do I need to modify packaging or labeling to suit the intended market?
- What, if anything, do I need to protect my intellectual property?
- What is the cost to get my product to market (including freight, duties, taxes and other costs)?
- Given the projected cost, what is my pricing strategy?
- Are there steps I can take to reduce costs to be more competitive?
- What modifications do I need to make to my website or e-commerce platform to serve this market?
- Should I sell on third-party e-commerce platforms optimized for international sales?
- What kinds of social media should I use to build awareness?
- Should I attend trade shows, and if so, which ones? (Commerce’s Small Business Export Assistance team can provide you with options).
- Is the decision to export based on solid business objectives (increasing sales, expanding market reach), or is it based on something less strategic, such as the owner’s desire to travel?
- How committed is management to exporting? Is it part of a long-term strategy, or is it a short-term fix to shore up slumping sales domestically?
- What are the expectations? How long is management willing to stick with an exporting strategy, and how will success be measured? What is the level of return investment required to become self-sustaining?
- Has your company conducted business in other countries before, or are there customer inquiries from markets you’re not currently serving?
- Which product or service lines receive the most queries?
- Are domestic customers buying from you and selling or shipping their purchases overseas? If so, where?
- Is the volume of sales and inquiries increasing or decreasing?
- Who are your main competitors, domestically and overseas?
- If you’ve tried exporting in the past, are there any lessons to be learned from the experience?
- What expertise do you have in the company regarding international markets and trade, including sales experience and in-language capabilities?
- Who will be responsible for the export function’s setup and operation?
- How much and at what level will senior management be engaged in terms of time and decision-making?
- What changes must be made to your organization’s structure to ensure exporting is adequately staffed and resourced?
- Who will be in charge of executing the plan once it is completed?
- How is present capacity being utilized?
- Will the addition of export orders hurt domestic sales?
- What is the cost to add to production if needed?
- If there are fluctuations in workload, when is it, and why does it occur?
- If products were to be exported, what is the minimum order required?
- What changes, if any, need to be made to the packaging or product to make it export-ready?
- What amount of capital can be committed to export production and marketing?
- How are initial expenses of export efforts to be allocated? What is the break-even point?
- Are any other initiatives going to compete for time and resources during the execution phase?
- What is the drop-dead date where exporting must pay for itself?
- Do you qualify for any type of export financing?