10 Things To Consider Before Exporting
For many businesses, exporting can bring about plenty of benefits. For most, these include:
- Increased Sources of Revenue
- Diversify Market and Reduce Risks
- Enhance Competitiveness
- Achieve Economies of Scale
- Circumvent Saturated Domestic Market
To help you get that plan right. Here are 10 things that you should consider before exporting.
1. What are your options?
There are many different ways a company can sell overseas including, direct sales, exporting through eCommerce, using in-country agents or distributors, licensing or franchising a business, launching joint ventures with partners or setting up an overseas branch.
Each method has different costs, risks and challenges so it’s important that you do the relevant research to find the best options for your business and its target market.
For example, eCommerce platform like Alibaba.com allows you to export using low costs, gain access to millions of active buyers, fast transaction time, more transparency in transactions and lower risk of fraud.
2. Who is your target market?
Who are you targeting? Does your product or service have a value for them? And once they buy from you, will they sell it on to the end consumer and make a profit themselves?
These are all important questions to answer to ensure that you know who you are selling to and that there are enough potential customers to make your business a success overseas.
3. Is there a need for your product abroad?
Just because people are interested in your product or service in your area doesn’t mean they’ll be interested anywhere else.
Every country is different, so it’s crucial that you do some research to find out if there’s demand for your goods. If you don’t do the research ahead of time, going overseas can be a huge waste of time and some money.
4. Do you gauge others’ similar experiences?
International trade always involves challenges but there are ways to avoid any unwanted pitfalls.
Contact your local Chamber of Commerce or Exabytes’ very own Global Trade Consultant to see if you have doubts about the prospect of exporting and learn from other people’s experiences.
Also, you might be able to learn from your competitors. Is your local competitor exporting? Do you know who your local competitors would be? This information can help you formulate what your role in the market will be.
5. Where is your destination?
Understanding the countries that you are thinking about exporting to and their markets is essential for success.
Each country has different cultures, languages and laws. And within those countries each area might differ too. This is why having local knowledge is invaluable.
If you don’t fully understand the culture, speak the language or understand the laws you will need a trusted advisor to ensure you don’t make any costly mistakes.
Fortunately, eCommerce platforms like Alibaba.com allows you to access more than 190+ countries with 18 different real-time translated languages.
6. What protection will you have?
Two of the biggest challenges when trading overseas are the uncertainty of the exchange rate and how you will be paid for your products or services.
Fortunately, there are ways to protect your business from both of these.
Export finance can be a valuable source of working capital and it can be advanced in the favored currency to mitigate fluctuations in exchange rates.
Plus, export finance companies can also provide credit protection to safeguard cash flow against the risk of bad debt, as well as credit checks.
Alternatively, a letter of credit can help exporters to trade internationally with confidence by providing a bank guarantee that you will be paid in the event your customer is unable to settle the debt.
7. What is your strategy?
To ensure a successful business move, you need to plan ahead. Figuring out both the what and the how of your new venture is key to not only providing a strong foundation but also keeping things in perspective.
8. How will you manage your cash flow?
With longer credit terms and further distance for goods to travel, exporting can place a strain on cash flow.
Therefore it’s essential that you have plans in place to ensure you have enough working capital to fund new orders and grow the business without putting your business at risk.
As mentioned above export finance can help boost your cash flow when exporting by advancing payment before your customers pay.
Pre-shipment finance releases funding against the order value to accommodate the transit of goods before the exporter receives payment whilst post-shipment finance advances capital upon the shipment of goods, bridging the gap in the interim whilst awaiting payment.
9. Consider taking advantage of Free Trade agreement like RCEP
RCEP is essentially the world’s largest free trade agreement that serves as an overarching mechanism for free trade among the participating countries with a unified set of rules and procedures for accessing preferential tariffs across the region.
This implementation will enable Malaysian businesses to enjoy the global trade and investment ecosystem based on a rules-based multilateral trading system, eventually eliminating around 90% of tariff among member countries.
10. Do you have the necessary funding?
Do you have enough money and resources to deal with demand increases? Do you have the right equipment to handle an increased workload if needed? Do you have enough operational cash to meet customers’ long payment terms if they’re asking for one?
If you need additional cash flow for any of the reasons above it’s important to find the most suitable funding facility and partner for your business’s goals and ambitions.
Exabytes’ Global Trade Consultant is always ready to provide you with the necessary information to get additional funding from MATRADE.
Sell on Alibaba.com
The best strategy to deal with inflationary pressures may be to use e-commerce marketing. Online marketplaces make it easier for small businesses to minimize costs without compromising quality. One of these is Alibaba.com.
Alibaba.com is a superb cross-border selling platform known for its inclusion of and support for small businesses. Its sellers receive more than 400,000 sales requests every day and have more than 40 million active buyers from 200 different countries and regions.
Alibaba.com is a business-to-business marketplace. As a result, you could sign contracts with five companies that would each purchase at least ten products rather than attempting to sign agreements with ten clients who would each purchase just one or two things.
Alibaba.com provides small businesses with additional advantages, such as a classic no-code storefront where they can easily display their products for customers to choose from, in addition to helping them to cut operating costs. Open a seller account on Alibaba.com to enjoy these and a lot more.
Access the Global market through Alibaba.com today! Do not hesitate to approach us. Contact us for more information now!
Sources
https://www.matrade.gov.my/documents/ebook/guide_exporting/4/
https://www.icontainers.com/us/2014/09/25/10-things-consider-exporting/
https://www.hiltonbairdfinancial.co.uk/10-things-to-consider-before-exporting-for-the-first-time/
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