Growing your business through exporting

If you’ve identified an opportunity overseas, having an in-depth understanding of your market will help you decide whether exporting your product is a good idea.

Take a closer look at the market; how big is the opportunity, are there any competitors and what will customers be willing to pay? Comprehensive market research is a key step to deciding whether exporting is viable.

You should also see if any prohibitive trade embargoes or sanctions are in place. Socio-political unrest or ongoing economic instability could make exporting a non-starter. Legal requirements, such as liability insurance and complying with local regulations, should be considered too.

Exporting overseas can create new logistical and financial challenges for any business, so it’s worth answering a few questions to see if your business is in shape to begin exporting its products.

Can you meet capacity?

Satisfy yourself that your business has the ability to produce larger quantities of product and that your suppliers can scale up to meet your increased demand. As well as making sure you have the finance to fund this increased volume, it’s also important to have a plan to cope with success; nothing is more frustrating – or potentially harmful to your business - than turning away orders.

Are you financially robust?

Although exporting creates a larger market with greater possible returns, the extended period between production and payment for goods can also create a funding gap. There are two ways you can lessen this impact:

• Negotiate better terms - agreeing delayed payment or part payment with your suppliers can reduce your initial outlay. Similarly, agreeing progress payments or payment for landed goods with your buyers can help with cash flow.
• Increase your working capital - cash reserves and investment from partners or investors can cover short term deficits. Alternatively, business loans or lower-rate trade finance loans can help with an extended payment cycle.

Are your transportation plans shipshape?

Choosing the right shipping method, understanding customs requirements and having a contingency plan will help you move your goods smoothly.

Typically, container ship transportation is better for larger volumes and is less expensive, but slower. Air freight is suited to lighter or perishable goods, is faster, but more expensive.

Customs restrictions

Check that there are no restrictions or special tariffs on your goods, and confirm which countries your goods will travel through. You also need to decide who will lodge the paperwork with customs (usually the exporter). Both New Zealand Customs and the Ministry of Foreign Affairs and Trade (MFAT) can provide information on tariffs, duties and free trade agreements.

Plan for delays and unforeseen circumstances, as these can happen; having a contingency plan in place will ensure you can meet your contractual obligations.