Planning - the key success factor in export business

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SME Times News Bureau | 17 Jan, 2011
Operating an export business is exciting, adventurous, and financially rewarding. At the same time, it is full of challenges and risks. But if you are successfully operating your business in your own country, there is no reason why you could not enter into the challenging but must lucrative world of export business.

Before you start, you must have knowledge of what export business is, how to find and explore an export market, what ways you should follow for product promotion and marketing, how to transport the goods, what are the legal problems you may face, etc. In other words, you need to have a sound plan before you jumping into an export business.

Export planning
It is very important to conduct market research before you commit to exporting.The industry structure in the destination country, the demand of the products or services, the extent of competition, competing firm's strengths and weaknesses, and the need for product modification are some of the key issues that need to be considered during export planning.

After conducting the market research, you need to prepare a market plan that must address issues like source necessary financial resources, man-power, business laws & restrictions, product standards, etc. It is also important to consider packaging and labelling requirements and the estimated cost for doing that.

Selling & distribution in the overseas market
In exports, the marketing and distribution mechanism determines success to a great extent. There are two main ways- direct export and indirect export. You can set up a office in the foreign country to sale your products directly or sell over the Internet but in the second case, the buyers must be found out and everything related to shipping the products must be done by yourself .

If all the requirements for direct exporting seem cumbersome, you can look for export management companies which already understand the local market. Other options include selling the products to a distributor or a sales agent or entering into a joint-venture with a local business.

Marketing
While marketing your products in an overseas market, you have to be extremely careful in planning the marketing strategy. Besides business rules and regulations, you must also be aware of the tradition and culture of the country where you are going to do your business. Similarly, while promoting your products or services in a foreign land, it is important to be conscious of the taste and cultural feeling of the local people.

Transportation
If your business is involved in direct exporting of goods, you may require to take the responsibility of transportation depending upon the agreement with your clients. In such cases, what would be the best mode of transportation depends upon what type of goods you are going to export. Depending upon the contract, you may need to pack the products adhering to particular norms and also to arrange insurance. To get rid of these complexities, you may hire a specialist freight forwarder which can handle all the things your customers insist.

Financial issues
In export business, it is often seen that the delay between the shipping of goods and your receiving payment affects cash-flow. That is why it is necessary to be a little bit extra careful while handling such deals. If possible, you should insure your business against not being paid in case any overseas customer goes out of business. In terms of payment, if some of your customers face problems in obtaining foreign currency to pay you, insist upon letter of credit that secures payments at an agreed rate. To overcome risk in the transaction, yo may need a good understanding of some other different payment methods like Documents against Payment, Cash in Advance, and Open Account.

Export business has been identified as one of the best performing commercial trends. Successful exporters are those who are adaptable, committed, industrious and smart thinkers. But above all, what is required most to be a successful exporter is planning; he who fails to plan, certainly plans to fail.