Greg Spafford: Founding principal and managing director, Firstbase Business Services
In today’s global marketplace, many successful firms have expanded and increased their sales revenue by exporting to other countries. Canada’s largest trading partner, the U.S., is usually a first choice and offers enormous potential to increase sales and profitability. However, many exporters are now turning their attention to overseas markets that represent even greater opportunities – and challenges.
Expanding your business internationally can bring significant benefits but carries additional risk that requires research, an understanding of political and economic climate and due diligence.
Consider these factors:
•identify the target country or region that you want to export into;
•research, select and choose the right distribution channel;
•define the terms of the reseller contract and agree upon mutual expectations;
•how currency fluctuations may impact trading risks;
•establish a credit management policy; Export Development Canada is a viable option here;
•litigation and liability risk – it may be a benefit to establish a different operating company for your export business;
•shipping and transportation costs;
•duties, tariffs and import taxes;
•language – where possible, conduct business in English or another language you are familiar with as another layer of complication is introduced when using an interpreter; and
•update your website to clearly articulate your “value proposition” for international inquiries and to support your reseller network.
Barry Sharp: Principal, Barry Sharp Business Consulting
Would you deliberately ignore most of your potential customers? If you’re only targeting Canadians, you’re missing 99.5% of the people out there. Of the seven billion people in the world, Canada’s population is just 35 million.
Are you an expert? With phone, email and Skype, you can work with customers around the globe. We’ve prepared business plans for people in North and South America, Asia, Europe and Africa. There’s (virtually) no hassle to providing expertise, except for language … and time zones.
Great products can excite worldwide interest. Canada is renowned for excellent quality products. Food examples include fish, wine, maple syrup and frozen french fries. Because Canadians are picky, our manufactured products like airplanes (Bombardier), submarines (Atlantis) and water slides (Whitewater West) are global quality leaders.
An interesting advantage is that we’re “not American.” This has political advantages, because many countries dislike the American government and their massive corporations. At the moment, there’s also a monetary advantage due to our lower dollar.
One of my mantras is that “a sale’s not a sale, until the money’s in the bank.” Your local food store won’t take your receivables in exchange for groceries. So, you must ensure that your foreign buyer is going to pay you.
For relatively small contracts, under about $20,000, credit cards could be your solution. You’ll pay 2.5% to 3.5% commission, and get your cash within a couple of days.
With all of the hassle involved in exporting, why should you even be interested? Re-read that first paragraph.
Igor Faletski: CEO, Mobify
For starters, see if you can get customers to try your product or service online before you put any boots on the ground. You’ll need to make sure your website is translated into the local language (and works well across all devices). The outcome is that you’ll be able to measure the local market’s interest, and identify the most relevant local regions. This can have a strong impact on your overall expansion route.
Secondly, I’d definitely recommend finding overseas partners and resellers to work with instead of doing direct expansion yourself. At Mobify, we continue to experience tremendous growth from working with international partners.
Our partner in Japan was instrumental to us in establishing a presence in that country.
We had little understanding how business is conducted in Japan and the nuances that exist in our particular market.
From day one your partner will have a much better idea about how to tailor your products or solution for the local market. Without a local partner I doubt we’d have been successful selling in Japan at all.
And the same applies to Brazil, which is where we’re headed next.
Partners and resellers also bring with them an established network and can quickly introduce you to a wealth of personal and business relationships that can help you quickly increase your local knowledge and understanding of the market.
Lastly, don’t underestimate the value of Canada as a brand power when expanding overseas. Overseas customers really enjoy doing business with people from our country – our values, culture and natural beauty are highly regarded around the world.
