It’s an exciting time to be a small business involved in exporting.
With the weaker AUD boosting Australia’s international competiveness in many industries outside of mining, and a host of new free trade agreements opening up entry into foreign markets, there are many great opportunities for small and medium-sized enterprises (SMEs) thinking about expanding overseas.
We have worked with hundreds of Australian companies, small and large, to help them compete and grow in international markets. In our experience, there are some common traits that successful SME exporters share.
They plan intensively
Many SMEs fall into exporting when they win a contract and so are not adequately prepared or set up for exporting. Others identify a chance to expand their business overseas and get excited about the opportunities before stopping to think about the practical realities.
In either case, it is important for any exporter to do the groundwork before making any important export decisions, and this involves a lot of research and planning.
Undertaking research into whether you have selected the right market for you is critical – picking the wrong market is a common mistake many new exporters make. Doing as much research as you can on whether a market is suited to your product or service before making any commitments is also important.
This is likely to involve visiting the country several times, meeting with potential partners and distributors, and researching the local customs and regulations. All of this will help you determine what you need to do to be successful in that market.
They network extensively
Building strong networks is important when establishing a presence overseas. Relationships and networks are crucial to meeting new customers, winning new business and delivering on contracts.
Tapping into valuable networks, finding the right partners and knowing where to get advice can all make a huge difference in succeeding overseas.
For exporters just starting out, industry associations, events and trade shows can be a great place to meet other successful exporters and like-minded businesses who are often the best source of tips, advice and inspiration.
Spending time on the ground in your chosen market early on is also important for identifying local partners to add to your network.
They manage risk effectively
What any exporter will quickly discover is that there are a number of risks involved with exporting, which can fundamentally affect your business.
Small businesses often have a healthy risk appetite, but carefully identifying and managing risks is important to ensure long-term success.
Depending on the market, you may encounter political, legal, operating, contract and currency risks when expanding overseas.
Unfortunately, there are no short cuts to avoiding risks in export markets, but as with any other business risk, you will need to follow a robust process of risk management to ensure your business is protected.
This involves conducting detailed research, seeking advice, making a practical assessment as to the risk likelihood and impact, and then developing appropriate risk management strategies.
They know where to ask for help
There is a wealth of detailed, easy-to-access information available to help Australian SMEs planning to export, it’s just a case of knowing where to look.
There are a range of government agencies, including Austrade and Efic, which offer advice and support for exporters. Industry associations such as the Export Council of Australia also provide access to information and resources.
Tapping into your local counsel is also important. Your accountant, financial adviser and lawyer are a great place to start when seeking advice on expanding your business overseas.
They are innovative, confident and optimistic
All of the SMEs we encounter are ambitious and creative, which stands them in great stead when competing on the international stage.
We have seen some great examples of innovation among SMEs, such as adapting their products and services to the special needs of an overseas market, or capitalising on innovative product features that have unique appeal offshore — features often seen as unimportant in the domestic market.
SMEs also have a unique confidence and optimism that enables them to take on the world’s best, and often win.
Using this confidence, backed with careful planning and a measured approach to risk, can lead to great success overseas for Australian small businesses.
About the author:
This post was written by Andrew Watson, head of the SME team at Efic – which provides financial solutions to help small and medium-sized Australian businesses grow their exports, offshore investments and onshore export-related business opportunities. Prior to joining Efic, Andrew was Head of Rural & Regional Banking at Bankwest and successfully transformed this business, implementing a new sales framework and improving credit quality. He was also head of Bankwest’s Property Finance Business where he successfully implemented a new business strategy for the division.