Selecting your export opportunity
You may be unsure about where to begin the process of selecting your export opportunity and, of course, you will be keen to find the most appropriate starting point and avoid making the wrong choices. Exporting is not simply a question of expanding your firm’s geographical boundaries; it is also about widening your horizons and thinking beyond what you currently do.
Often it is not a lack, but a wealth, of opportunity which presents the first time exporter with a problem; in this situation you are advised to narrow and limit your choices. Resist the temptation to leap at opportunities and over-stretch limited resources.
Profit can be increased in two ways: by increasing your gross margin or by increasing your sales volume. Gross profit margins may be increased by raising the price or by reducing the costs. You may find that your particular product or service can be sold at a higher price in an overseas market than in the UK. Alternatively, you may find that producing products for export will involve making better use of your existing production facilities, hence improving the overall margin.
There are no hard and fast rules as to how you should begin to export; even within established trade routes each business will find the method(s) which suit(s) them. The fact is that you might already be an exporter. Looking back over your sales records, you may discover that your product has been purchased by a foreign customer, or that you have responded to an enquiry which has come from another country. If such instances can be found then it will be worthwhile examining how they have arisen. What brought your product to the attention of the enquirer? Why did they buy your product? Was it better value than a domestic alternative? Are there likely to be further orders? The answers to these and other questions may yield the first clues as to how you should approach your export strategy in order to take full advantage of an existing opportunity.
Focusing on a single export opportunity means that you can bring all your resources to bear on making sure you gain market share. So if you offer a range of products or services, deciding what to export is going to involve some thought. Unfortunately, there is no sure-fire formula for determining what will sell. Perhaps the most important point to consider when deciding what to sell, is where you will be selling it. Thorough market research is the only way to gain an insight into the opportunities which exist. Market factors - existing industry structure, lifestyle, customer base and demand, competition, etc - are inseparable from decisions about your product; while you need to have some ideas about what you will sell before you begin market selection, you should be prepared to refine your ideas in the light of what you discover.