Exporting your business is about more than just finding prospective customers abroad. It takes a large amount of preparation and hard work. More than that it will probably take a change of mindset; you’ll need to be flexible in your finances and thinking, and possibly be prepared to adapt the very nature of your business. Below here are 6 issues VietnamCredit thinks that you should remind before exporting to get success:
1. Where are you going to export to?
As with everything in business, research and preparation are essential to the success of your exporting operation.
Look at all markets you think will be suitable for your business. Identifying them in a prioritized list is a great start; concentrating on your top three for greater insight is even better. The world is a big place and you can easily stretch yourself too thin. It’s a good idea to start with a single country. Once you’ve gained some experience and have seen some success in that country, you can consider branching out.
Solving the ‘where’ bit of your export ambitions is exciting, but keep your thinking focused you’re your research poses more questions than it solves, you might want to reconsider that country until you’ve gained more experience.
2. How are you going to sell?
Again, remember to be flexible. Take local customs and preferences into account – remain open-minded and look at all your options. For example, there’s no point creating relationships with outlets when a sales agent could offer you theirs for a fraction of the cost.
Consider the pros and cons
• Opening a branch is the most high-impact option, but also the most expensive.
• Selling online is the cheapest but has its own specific challenges. The competition is fierce, not just with other businesses, but with indirect and unrelated distractions (like videos and games) all vying for the attention of online shoppers. Make sure you stand out for your target market.
• Always refer to your business plan – what suits the growth plan best?
• Relationships are important – don’t gamble on anyone you don’t trust.
• Never promise anything you can’t deliver – doing something badly is often worse than not doing it at all.
3. How are you going to get paid?
The way you actually receive payment will almost certainly be different for exports, especially the time it takes to come through. Getting paid is one of the biggest risks associated with exporting, along with shipping, so minimize it by taking the following into account:
• Don’t go into the red - your cash flow will be tested, so discuss the implications with your bank or other affected parties well in advance.
• Get it down in black and white – get everything down in writing, always.
• Make export customers show you they are creditworthy – don’t be afraid to ask for a percentage deposit.
• Currency exchange fluctuations could mean a great deal turns sour overnight. Plan carefully and learn from the success and failures of others.
• Think about moving the risk of non-payment from the buyer to the buyer’s bank or – even better – to a bank.
• Think carefully before granting extended credit terms – check credit reports and look at taking out credit insurance to guard against non-payment.
4. How will you get there?
Transporting your goods may have unique logistical challenges in certain countries. Local laws, the local climate and sheer distance are important factors to consider.
It's your responsibility to operate within the law. Expect something of a learning curve and always assume you’ve missed something.
• Understand Incoterms – the internationally recognized rules and definitions commonly used in export/import contracts.
• Have different pricing for different Incoterms
• Make sure your contract defines (by Incoterms) which party is responsible for freight costs, insurance and import duties at destination.
Many documents required for export are generic, like:
• Export invoices - containing a detailed description of your goods and the correct commodity code.
• Standard transport documents - the carrier’s receipt for the goods with details of the contract of carriage and routing
• Dangerous goods notes - if your products are hazardous.
• Export licenses - not always needed, but worth knowing about.
5. How well do you know your customers?
To establish a successful relationship with overseas customers it’s important to find out how they think, and what they need. They could be influenced by centuries old traditions, or local trends, or both.
You cannot and should not trust your customer completely unless you have had a long-term cooperation with them. In a strange market where business practices and business psychology are totally different from your country, your business will not be able to anticipate what challenges you may face.
It requires a lot of steps and methods to investigate and evaluate a customer for an accurate and reliable credit report. As an import-export company, company report is the key to not only understand your customers but also to give you success.
According to VietnamCredit, a company information provider with 22-year long history in Vietnam, three main factors that must be taken into account when evaluating financial performance and trustworthiness of a company are: Financial factor, Internal factor and Market factor.
It is essential to cooperate with business organizations that provide company information. Having the important information of customer means we take the initiative and can make more accurate decisions and avoid risk. We can use it as a springboard to become a wise businessman in the modern age.
With more than 22 years of history in the business information industry with a team of dedicated, experienced professionals, VietnamCredit is proud to be Vietnam's leading enterprise in the field of providing business information and company reports such as Comprehensive company reports, Company light reports, Financial reports and International company reports. VietnamCredit always runs on a mission to bring information for the development of Vietnamese enterprises in particular and beyond is the desire to promote Vietnam's economy more and more.
6. Why do some businesses get it wrong?
The road to export success contains many twists and turns, but one way of avoiding the mistakes is to learn from other peoples.
One of the most common is simply taking your eye off the ball with your domestic duties. Painstaking preparation and a perfect export strategy are all very well, but you don’t want to let your local customers suffer as a consequence.
Another common mistake is making assumptions about local laws and customs. But if it’s the right time for your business, and you plan your export strategy carefully, there’s no limit to the opportunities awaiting your business.
When you’re sure that exporting is the way to go, it’s well worth kicking off with an export cash flow forecast. This will let you get an idea of the numbers before anything has been committed. You can see how it fits with your existing business plan and seek second opinions on whether it looks watertight.