Export Markets – Over the years, I have had the privilege of chatting with many business owners about how their business is going. One of the most common comments that I receive is “the economy is very poor at the moment and my business is down as a result”. When I receive this comment I like to remind them that in other parts of the world there is amazing opportunities and that they should not be “putting all their eggs in one basket” i.e. just selling their products into one market.
My blog this month is to explain why businesses must have an export market.
“Putting all your eggs into one basket”
There are many external forces that can adversely affect your business and your potential to generate sales, revenues and profits.
If your business is only depending on one country then a reduced demand in this economy can have a significant impact on the viability of your business. It can led to good businesses failing not because they offer poor products but because the customers in that market simply don’t have the ability to purchase the product.
The Graph below shows all the external forces (in arrows) that can affect your local market.
Unless you are a dictator you will not have any influence on the effects of these external forces.
When these external forces constrain business revenues and growth you only have 4 options available to generate growth for your business.
These 4 options (Ansoff Matrix) are:
- Market Penetration: increase sales with existing products in the market.
- Product Development: increase sales with new products to the market.
- Market Development: increase sales with existing products into new markets.
- Diversification: increase sales with new products into new markets.
Have a look at the matrix below. What do you think is the easiest way to grow your business in a slow economy?
For a lot of businesses the market development route can be a very cost effective option for growing business.
Goodada through its International network and online platform provides businesses with a cost effective approach to open up and develop new international markets for their products.
The Key Benefits to your business of Exporting
Research has confirmed that businesses which export have benefited through:
- Increased sales revenues and profits
- Spreading of business risk
- Building resilience to individual (domestic) market fluctuations
- Enabling economies of scale in production/service delivery
- Driving innovation in business models and product/service development
- Strengthening the business against domestic competition
If you think that only large companies have the ability to export, you are wrong, there was a survey taken by the US Small Business Administration which proves that business size is not a barrier to export,
The Key Risks/Challenges of Exporting:
The biggest challenge to developing an export market is the “Perceived Fear” that everything will be wrong in other countries.
I have drawn up a list of the typical risks which arise when a business exports:
- Country Risks
- Political/economic stability
- Legal/Regulatory regime
- Customs/Taxes/Tariffs
- Intellectual Property
- Currency Risks
- Exchange rate stability
- Payment/credit risk
- Culture Risks
- Language and empathy
- Customs and practices
- Awareness of buying & negotiating styles
When you review the above risks, they are not so big. There are lots of companies out there such as Freight Companies and Quality Control Inspection companies that can easily assist you to develop your export business. Start talking with them about all the opportunities available to you.
About the author
Aidan Conaty is the founder of Goodada.com. Aidan has spent over 15 years assisting companies to trade internationally. He founded Goodada so that it can provide the tools and services that can assist companies to trade internationally.
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