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2017, March 10 - Exporting Guide for Small Businesses

Exporting Guide for Small Businesses

Five (5) things you should know before exporting
(when planning your business strategy)

1. Where are you going to export to?
a. Research and preparation are essential - look at all the markets (countries) you think are suitable for your business
b. Prioritise the top three (3) markets
c. Decide on the best sales channels to use
d. Familiarize yourself with local laws and trading standards, duties and taxes

2. How are you going to sell?
a. Remember to be flexible
b. Take local customs and preferences into account
c. Remain open-minded and look at your options, example, whether a sales agent would be more economical than an outlet
d. Look at the pros and cons, example, selling online may be a cheap option but it has challenges
e. Never promise anything you cannot deliver

3. How are you going to get paid?
a. Payments for exports will certainly be different from how you normally get paid, especially the time it takes to come through
b. Ensure your customers are creditworthy; consider requesting a deposit
c. Consider the risk of non-payment from the buyer; consider taking out trade credit insurance (TCI) to guard against non-payment.  This is offered by the EXIM Bank.
d. Give careful consideration before granting extended credit terms; check credit reports

4. How will your goods reach your market?
a. Review the logistics challenges:
i. Local laws – it is your responsibility to operate within the law
ii. Local climate – will your goods require refrigeration/special storage
iii. Distance – from port of call (point of entry) to final destination
b. Ensure that you understand “incoterms” – rules and definitions governing exporting/importing contracts
c. Ensure that you know which party is responsible for freight costs, insurance and import duties at the destination
d. Explore what documents you require.  Some include:
i. Export invoices
ii. Standard transport documents, example, carrier’s receipt for the goods
iii. Dangerous goods note – if your products are hazardous
iv. Export licences, if needed

5. How well do you know your customer?
See excerpt below:
Know your customer’s culture, understand the differences
The number one piece of advice for companies that are looking to export is to get to know everything about your customers and their culture.
Knowing your customer’s customs, values and traditions is an important step on the path to an enlightened and enduring relationship.  However, knowing how these norms affect the business development cycle and attitudes towards time and quality of product is equally important.
Everything from learning the language to reading local news or buying competitor’s products will help you to know who your target market really is.  If necessary, engage a native who can be trusted to guide you.

SUMMARY
Exporting is more than finding prospective customers abroad.  It takes a lot of preparation and work and may even require trial and error before getting it right.  You will need to be flexible in your finances and thinking and may even require adapting the nature of your business.  It would also be prudent if you were to do an export cash flow forecast before you get going to see how it fits with your existing business plan.

References
US Eximbank
Clydesdale Bank PLC, UK

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