Where’s a good place to start? It can be a major issue for many businesses who are keen to export. Most businesses get established by selling to customers in their own country, so the mere thought of adding anything up to another 200 potential arenas can make the most sober of us feel like a hungry child in a sweet shop.
In many cases, exporting is the most effective way of growing a business that has reached a level of stability in its home market. But it can equally be the road to ruin if it causes a company to overstretch itself, or diverts attention from the home market. For this reason, it is vitally important for a new exporting company to have a sense of discipline, based on some sensibly determined plans and expectations.
Above all, it can be so tempting, and yet so destructive, to jet off into the sunset, visiting every country where we can find someone who is interested enough to talk to us, and imagine that by doing so we are just weeks or months away from world domination. Take a reality check! Most businesses take quite a long time to really understand and meet the needs of their home market. That’s just one country, and not only that, it’s one that they already knew pretty well, and faced little or no problems of language, culture or an unfamiliar legal/financial regime. It’s pie in the sky to think that, having gone through the painful process of establishing a successful business in one place, we are then going to replicate that success time and time again in other places without at least the same degree of pain.
Most conventional thinking on developing export business recommends that a new exporter should limit themselves to between one and three markets at the outset, depending more than anything else on the time and resource they can dedicate to the venture. But which one? Or which three?
In answering this question, we need to empty our minds of any prejudices or preconceived ideas. The best initial markets for my business might not be the ones I’d first think of. For a lot of us, our notions of what other markets are like is skewed by a little bit of first-hand experience and some words of wisdom that are passed down from one generation to another that are well past their sell-by date, if indeed they ever had any validity in the first place. You may find this hard to believe, but I was once offered the following advice by the elderly export director of a very successful manufacturing company, and I quote him word for word: “Never trade with a country that has green in its flag, or where they don’t wear coats in winter.” Right, that’s Ireland and Italy out then, as well as two of the so-called BRIC economies (Brazil and India, in case you were wondering), most of the countries in the tropics, and a very large part of the Muslim world. Yeah, thanks for the advice.
Some well meant guidance offers the idea that there are some relatively ‘easy’ markets which are most suitable for a newbie exporter looking to get started in. In particular, there’s a lot of talk about Europe and something called the ‘Single Market’ which in my 25 years in exporting has always eluded me, I’m afraid. I strongly advise readers to avoid off-the shelf advice in this matter. What is an easily accessible market for one business might be a brick wall for another.
Some years ago, I ran a small service helping first time exporters to break into European markets. A very self-assured man came to see me; he owned a business that produced products for pet dogs. He was already doing pretty well in Britain and was driven mostly by his consuming passion for owning and training canine creatures. I offered to publicise his business with what was then quite a revolutionary online service where I could share his details with other consultants around Europe. Pretty soon, we got a reply from someone who appeared to be in France. I told the client and he was quite excited at the prospect of establishing something in France.
When I examined the enquiry more carefully, I realised it came from Reunion, a little island in the middle of the Indian Ocean. A silly mistake on my part, but an understandable one as Reunion is one of a number of places that is described as a French ‘departement’ and from its postal address it looks like a part of mainland France. I thought the client would be disappointed when I explained this to him but he shrugged and said “Do they have pet dogs there?” I told him I believed they did, and he was more than happy to engage with the client. Don’t worry if your early markets are not the most obvious places. Sometimes, there is a big opportunity in a small or out of the way place that major competitors have overlooked.
It’s helpful to research potential markets in a ‘top level’ way, if nothing else to at least see if some markets can be designated as either ‘don’t go there’ or ‘not yet’. Anyone selling alcohol or pork based products would probably make little headway in Muslim majority countries, and might even get into a heap of trouble. But other knock out factors can be more subtle. Some companies are using a licenced technology or process that they are not entitled to take to other countries. Some products, such as printed publications and computer software that rely on the user speaking English to a high degree may be restricted to English speaking markets unless the task of translating the material can be tackled, which may be onerous for a new exporter. Businesses that sell services, such as management consultants, may find they are very restricted in their prospects unless they can offer to deliver their services in a local language.
It’s also important to bear in mind any self-imposed restrictions. Some people don’t like long-haul flying or the prospect of travelling to countries they might consider dangerous. Some of us have family or other commitments, and need to limit how much time we spend out of the country. None of this means we can’t be successful exporters, but we do need to bear these limitations in mind and plan accordingly.
The thing to remember is that, while other people can offer information and advice, no-one knows your business better than you do. Successful exporters well understand the key winning features of their products or services, as well as (crucially) their weaknesses. Then they go about finding markets that are best suited to what they have to offer.
One of the simplest ways to gather information is by having a decent website, and getting it ‘tagged’ effectively so that it’s highly visible to users in other countries. A lot of enquiries from one place is a pretty strong hint that it might be a good place to investigate. My approach to exporting has always been to keep a strong hold on interested contacts, wherever they are, as they are a much better source of information than any training course, text book or export advisor will ever be. They know their market because they are a part of it. So even if an enquirer is not from a country that I am currently seeking to target, I respond to them as if they were a long-lost friend, and don’t let go.
But of course, that comes back to what I said about discipline and having a plan. Responding to any and every enquiry is surely just good manners, and in any case, I never know when that guy in Georgia might be a crucial ally as we eventually spread our empire further to the east. The focus however, should remain on my carefully chosen target markets, unless and until I either complete my objectives or I realise that my plan isn’t working.
So I’m sorry to conclude that I don’t have an answer to the question of where to start. Like so many things in business and in life, there are no golden rules. The best place to start is down to the individual’s judgement, although a second opinion from an experienced mind won’t do any harm. Don’t be too ambitious, and please don’t rely on prejudice or out-dated ideas of what a certain country is like.
Finally, as I have said before about any plans, they are really just best guesses. We need to have a plan because without it we either won’t do anything or we will do too much. An activity plan with a prediction of outputs is useful, as it helps us to see if we are making progress. If it becomes clear that the plan isn’t working out as expected, be prepared to revise it, or even ditch it completely if necessary.
Written 5th October 2011 by Tim Hiscock, S&H LLP Associate
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