If you’ve been successful in the domestic market and are now looking to grow internationally for greater scale in your business, it’s important to consider the market, your product and familiarise yourself with the business practices and regulatory environment of that country.
“Exporting is a lot harder than doing business in your own domestic market because you tend not to face the same barriers,” says Andrew Hunter, Managing Director of Efic, a specialist provider of export finance.
While there will always be things that take you by surprise on your export journey, you can prepare your business by addressing the following questions.
How familiar are you with that export market and why do you think you’d be successful?
The market is not always a level playing field. Have you understood the tariffs and regulations that might restrict the competitiveness of your business?
“The domestic participant of a market may have a regulatory or even a price advantage because of tariffs or quotas in place,” says Hunter.
“However, the free trade agreements that Australia has signed with South Korea, Japan and China have gone a big way to eliminating those tariffs.”
What makes your product special?
“Have a conversation about what makes your product or service special and why it is going to be successful in this market,” says Hunter.
“For example, what do people think about Australian agricultural companies? Usually, it is that the Australian brand is ‘green’ and ‘fresh’. This is a competitive advantage when you go to an export market.”
Do you need an export partner?
“In many countries, such as Indonesia for example, you cannot distribute product unless you have an export partner,” says Hunter.
“Trust is built over time, however, not through signing the contract.”
Examine what credentials they have, and whether you are going to be able to successfully distribute your product.
Should I network and build relationships to succeed overseas?
“We encourage export clients to have a network of people who either export the same product, or who operate in a similar sector,” says Hunter.
Find out what the border issues are, how long it takes to get your product through customs, what the transport logistics are like, or what assumptions you should make around container failure if you’re exporting a perishable good.
“We do find that Australian exporters are very comfortable and willing to share their experiences, rather than seeing other exporters as competitors,” says Hunter.
“Exporters like to see other Australian exporters succeed.”
What are your capital requirements?
“Nothing ever goes to plan when you are exporting – what happens if it takes three months longer to get paid by your customer? How will your business cope?”
Ensure you know your capital requirements and build a contingency into your business plan. With a reasonable degree of confidence, you should know what your working capital cycle is going to be and how long it will take you to get paid.
Once you’ve got good relationships and a history of working with certain customers, you’ll then tend to establish a good cycle around payments.
How can you get help with funding?
The biggest barrier to successful exporting is having access to finance.
With this in mind, Efic’s new Small Business Export Loan has been developed alongside its Export Contract Loan to provide capital solutions to small business exporters.
“Efic was granted broader lending flexibility in March 2015. We rolled out a product called the Export Contract Loan and we started to get feedback,” says Hunter.
“We were told that exporters wanted an unsecured product. They were typically smaller companies with turnover of less than 5 million dollars. One of their constraints was that they didn’t have any collateral to offer to the bank.”
“Secondly, smaller companies tend to have small finance teams and they needed a simpler, online solution, rather than a manual process requiring greater time commitment.”
“They also wanted to get their money quickly,” says Hunter.
“We developed the Small Business Export Loan to address these criteria. It is online, it is entirely unsecured and we can get funding to customers within nine business days.
“As Australians, we want Australian businesses to succeed and help our economy.”
Written by: Thea Christie
Find out more information here on how Efic can help SMEs with funding and advice for exporting.
At Efic we are committed to unlocking finance for export success. We are a specialist financier that delivers simple and creative solutions for Australian companies – to enable them to win business, grow internationally and achieve export success. To find out more about how we could help your business achieve export success, please visit www.efic.gov.au