A simple guide to export financing
With the right niche, trading overseas can help a business tap into thousands of potential new customers. But what are the issues to consider before taking your business offshore?
The market
In Australia, we’re fortunate to be on the doorstep of some of the world’s fastest-growing economies.
Whichever market you decide to target first, you need to do the same research you did before starting up in Australia. How many potential customers are there? Who are the competitors? What’s their market positioning? How can you differentiate yourself? Just because a strategy has worked for you in Australia, never assume it will succeed overseas.
The product
Do you need to make product changes to impress the offshore market? Start with the essentials, such as overseas licensing and labelling requirements, language and infrastructure differences (for example, electrical plugs and voltage). Then think about the competitive landscape and any cultural issues.
Marketing
The internet makes life easier but doesn’t do away with the challenges of marketing your product to distant customers. Trade shows and expos are a great way to get your name known overseas and find the right contacts around the world. You could also consider remodelling your marketing and your packaging to capitalise on your Australian origins.
Production and distribution
It’s essential to scope the size of your potential new market and ensure you have the staff and production capacity required to ramp up when necessary. Also, decide how to distribute your product overseas:
- Go direct by selling online or opening an overseas office.
- Find a distributor in your target market to on-sell your product, either to retailers or directly to customers.
- Sell to an export merchant – an Australian wholesaler who sends your products overseas.
Trade Finance
Overseas purchases and sales can stretch your finances to the limit as it can take much longer to transport your goods to market, clear them through customs, and get them into the hands of your distributor or customer.
Depending on your payment terms and shipping arrangements, a sizeable cash flow gap can open up thanks to the time lag between paying for a product and getting paid by your customer.
CASE STUDY: Seafood Innovations
When Seafood Innovations, a small Brisbane-based company, invented its unique fish harvest technology, its biggest challenge was to effectively introduce this technology to the northern hemisphere market.
Seafood Innovations encouraged the high-end salmon industry to take up this efficient and humane harvest solution. `We recognised a need existed and developed equipment and systems to replace existing harvest methods,’ said Seafood Innovations Managing Director, Bruce Goodrick.
`We targeted our market directly through our qualified technical staff, who demonstrated the new technology prior to each sale. We marketed our product specifically to address this need.’
Seafood Innovations succeeded in installing their harvest technology on a Norwegian vessel which now harvests up to 10,000 fish an hour in an automated environment. The technology has also reduced labour cost by at least 25 per cent and improved fish quality and product shelf life.
CASE STUDY: EcoSmart Fire
The EcoSmart Fire story began in 2002, when Uwe Backes and Stephane Thomas started developing a safe, high quality fireplace that has become a stylish new take on the old spirit stove.
Following the success of their product in the 2004 Australian Design Awards demand for the EcoSmart Fire quickly grew and the company recognised that they would need cash on hand to deliver.
`Having finance in place is essential. If you don’t arrange for your finance early enough, it will really slow down your growth,’ said Mr Backes.
EcoSmart Fire partnered with the Commonwealth Bank to have International Trade Finance facilities in place before demand took off. Today
EcoSmart Fire is on sale in over 500 retail outlets in 52 countries around the world.
EcoSmart Fire was an Australian Export Award finalist in 2007 in the Small Business category.
For more information contact the Local Business Banking Team on 13 19 98, visit www.commbank.com.au/trade or email [email protected]