The value of the Australian dollar against the greenback, the size of some of WA’s largest export markets and the perpetual search for bigger profits are just some of the reasons more and more WA businesses are looking at exporting.
But is your business ready to take the plunge? And what are the consequences if you fail?
The surprising, and scary, truth is that many businesses are so gung-ho about their international search for a better bottom line, they fail to think about what they want to achieve and how they are going to achieve it.
The development of an export market consumes time and money, and success requires strong management.
The reward for building a successful export business can make it all worthwhile. The vitamin business, Blackmores Ltd, saw revenue increase 65.5 per cent to $341.4 million in the second half of 2015 on the back of booming Chinese demand and the relaxation of certain Chinese government regulations.
Keys to success
To build a successful export business, you need the following fundamentals:
- Measurable demand in overseas markets
- Supply capacity
- Adequate human and financial resources
- Skills and information to prepare and support sustained exporting activities over the long term.
In most cases, solid domestic sales form the basis of a good exporting business.
A successful domestic business gives overseas buyers confidence in you as a supplier and will ensure your business processes are in place and well tested. Strength in the domestic market will also provide you with cashflow and the working capital you need to invest in developing export markets.
What are the costs?
The need for cashflow and working capital will quickly become evident when you start the export process.
Firstly, you may need to take on additional staff and resources to increase supply. There may be new costs associated with product modifications like flavours, packaging or size.
There are also travel and international marketing costs — for example, participating in an international trade show will give you instant exposure to people interested in your product and enable you to network with other exporters.
Other costs include international IP protection, capital investment and an investment in additional staff, such as export managers or business development managers, who can run the export side of the business.
Developing a strategy
You should develop and maintain a formal export strategy that aligns with your overarching business plan. This document will help keep you on track and can be helpful when dealing with bankers, financial advisers and government agencies.
Every export market is different so it’s important you understand the markets where you plan on operating.
The experts in CCIWA’s International Trade and Investment Centre can help get you on your way.
