Excellent export advice from NCET member Robert Francis. Robert Francis is president of Core4 Consultants in Reno. Contact him at 775-853-9480 or Robert.Francis@core4consultants.com. This column first appeared in the Northern Nevada Business Weekly.
One of the fascinating opportunities for companies in Nevada to increase their market share, increase profits, and increase jobs is by exporting their products in international markets. In June of 2013, US exports reached an all time high of $190,528 Million based on the U.S. Census Bureau. The global demand for US products continue to grow and Nevada products could be a part of this growth. The objective of this article is to provide you a high level step by step Export Road Map.
The first step is for the owner and or management of a company to decide if they want to export their product or products to increase market share and revenues. This is important because management needs to commit to funds, resources, products, and the development of an export plan for the company to be successful with their export activity.
The second step is to identify the market opportunity. The US Department of Commerce (USDC), the Nevada Economic Development Office, Chamber of Commerce, US Embassy in the target market and Core4 Consultants can help with this effort. Another tool you can use is you’re Personal Computer and the Internet. There is some incredible market information on the worldwide web. The market data would allow you to determine, initially, the size of the opportunity to see if it is financially feasible for your company to pursue a specific international market. It will also provide information about the country, culture, the product demands, economy, government stability, currency,
legal guidelines, and banking information. There are also private companies that will generate specific reports for a country and target market for minimal cost.
The third step is your management and engineering leadership need to make a decision if the product or products are suited for export based on the target market. You need to determine if design changes are required for the market; packaging/labeling may need to be addressed as well. You also need to decide if you are going to change one product in your product line or change all your products to support all your markets. If design changes are needed, the cost of the design change options needs to be evaluated along with the impact on materials, manufacturing, logistics, product cost, and business case.
The forth step you need to address is how do you plan to sell the product to your customers. The options are to sell with either the “Direct” or “Indirect” approach.
If you are Selling “Direct” that means that your company takes orders and ships product directly to your customers in the target market; you need to have the people and business processes in place to support order fulfillment requirements and export requirements.
The “Indirect” approach is where you use a company like a broker who will take your product and sell it to a target market. A distributor/partnership is another indirect approach to deliver your product to your target customer. A third indirect approach is where a consulting company addresses technical support, orders request, logistic, and export activity and the local partner/distributor handles sales and delivery to the customer.
Whichever approach you choose, you need to evaluate your business processes, supply chain, manufacturing capacity, logistic, people and IT capabilities based on increase in demand. Core4 Consultants LLC has experience with direct and indirect exports and is able to assist your company.
The fifth step is to determine how you plan to market your product in overseas markets. Leverage the internet as a marketing tool to sell your product. You are able to reach millions of people in different markets based on how you position your product on the internet. You can also establish links to internet sites in local markets to further promote your product. In line with this comment, I would recommend a website in the local language you are trying to sell your product. From personal experience, translating the website in the language will help to promote your product. In addition, trade shows, conferences (domestic/internationally), your business network, vendor, and trade magazines are other ways to promote your product in overseas markets; the USDC also has a great publication where you can promote your product internationally. In Nevada, the U.S. Commercial Service in Las Vegas and the Governor’s Office of Economic Development are also resources to identify and promote your product in international market. I caution you to look at cost benefit of the marketing options to determine which option will give you the biggest bang for the buck.
The sixth step I recommend would be to select a partner in the target market. Usually, local partners know the local market, economy, legal requirements, culture, and distribution networks. Two resources to identify potential partners are through your business relationships and industry events network. As you identify these potential partners, you need to define the type of relationship you would like to maintain with this potential partner: distributor, sales representative, or agent. Depending on the country or your business there may be legal as well as financial implications to these relationships; contracts should clearly spell out terms/termination condition in both languages using US and local council. I would also perform a detailed background check of the individual and company you plan to partner with noting the USDC and US Embassy have resources for most countries. Finally, before you make any commitments, I would visit the country so you can see, first hand, the market you are planning to do business in, meet local partners, understand how the partner plans to serve the market, their facilities/resources, and personally observe local business conditions.
The seventh step is to review your product readiness for export. Some areas you may need to address for the target market: product design, packaging, labeling, documentation, service manuals (if required), spare parts, and warranty. Depending on product complexity the list could be quite simple or more detail. The key point is to make sure you develop a detailed product design export readiness check list.
The eighth step is to make sure you address the shipping requirements. Work with freight forwarders to ensure awareness of packaging, labeling, shipping container (air/ship), export documentation, and potential trade zone opportunities. Some of the documents used are Bill of Lading, Commercial Invoice, Certificate of Origin, Shipper’s Letter of Instruction, Packing List, and Insurance Certificate. We can dedicate a whole section on export documentation but I will say that freight forwarders, USDC, and Core4 Consultants can help you with the export documentation.
The ninth step is to clearly define your pricing and terms/conditions for the product you plan to sell in a target market. This will maintain the relationship with your partners, customers, and insure you are meeting your financial objectives.
The tenth step is to establish a bank account with an international bank. This helps to facilitate your payment process, currency exchange, and any issues that may arise with the movement of funds.
If you need support or coaching with your export activity, contact the Northern Nevada Development Authority, NNDA (775) 883-4413 or Core4 Consultants.
Robert Francis is president of Core4 Consultants in Reno. Contact him at 775-853-9480 or Robert.Francis@core4consultants.com.