4 exporting pitfalls

While exporting goods and services to other countries has clear benefits for your business, there are a number of things to watch out for. Here are five exporting pitfalls and how you can best avoid them in order to ensure the viability of your export operation.

Not having an export strategy

An export strategy is your blueprint to exporting and not having one can result in disastrous consequences for your business. An export strategy should form part of your business plan and involves assessing the reasons for exporting, setting of goals and how these goals should be achieved. Not having an export strategy will make it extremely difficult to allocate resources, align marketing activities, plan for the future and recognise your strengths/weaknesses, among others.

Austrade has an easy-to-use Export Plan Template that can be accessed here.

Conducting basic market research

Many businesses make the mistake of conducting only basic or surface market research, and wonder why there is no demand for their products or why barriers to entry into a specific market are so high. That's because to ensure to viability of your export operation, you should delve deeper and conduct detailed market research on market size/growth, regulations, distribution/supply channels and other demographics. According to Austrade, market research should not be an academic exercise of assembled facts and figures. It should entail what actually drives a market and how to get the most out of it.

 Here's how to market effectively by knowing your customer  and how to understand the different types of research.

Inadequate risk management processes

Exporting comes with a myriad of risks, from the risk of late payments associated with extending credit to customers, to potentially dealing with fraudulent customers and supply chain shocks. As a result, inadequate risk management  processes can place pressure on your cash flow. It's not only important to be aware of credit risk, but also country risk, which encompasses political, economic and legal risks. For example, political instability, trade embargoes, different tax laws and rampant corruption are some of the risks that can have a significant impact on your export business.

However, what you can control are your credit terms, credit limits and credit checks on any customers or suppliers you will extend credit to. D&B Express  enables you to conduct a number of checks, from confirming a business's existence to predicting financial stability and payment patterns. Taking out credit insurance is also a good option to safeguard your business. For more information, read 10 rules to follow when extending credit.

Charging each export market the same prices

Prices often differ across markets as a result of varying exchange rates, economic conditions, import duties, taxes, shipping costs and compliance with foreign standards, among others. Importantly, you should also consider the final price your customers are willing to pay for a product - for example, Australian consumers pay significantly more than North American customers for beauty and skincare products.

Once you've done your market research, you can consider the different methods for calculating price: the cost plus method, marginal cost pricing, buyer-based pricing, competitive pricing and price adjustment strategies. NSW Trade and Investment provides further insight into these different methods.

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