Exporting is a big step, but it doesn't have to be a leap into the unknown. Take the right approach and you can become an exporter without exposing your business to unnecessary risk.
Exporting isn't just about having customers overseas willing to pay for your goods, it's also about getting the goods there and making sure you get paid while protecting your domestic business at the same time.
Common pitfalls include taking your eye off your existing customers as you focus your time and resources on exporting, failing to take the required precautions for getting paid and failing to research export markets thoroughly enough.
Start by identifying the areas you need export knowledge in the most. For new exporters, these areas usually include:
- Product development and marketing
- Document handling and legal knowledge
- An understanding of foreign regulations, standards and cultural preferences
Remember, you're not alone. Here are some handy support channels you can take advantage of:
We have advisors on-hand to answer your export-related questions.
- Export Development Canada
The Crown Corporation that acts as Canada's export agency, EDC works to support and develop export trade by helping Canadian businesses like yours.
Your province will have local trade advisors available to help you. Go online to your provincial government's website to learn more.
There's nowhere better to find business peers who've tackled the same issues you're tackling today than a business or industry association like your local Chamber of Commerce.
Narrow down the best export market prospects by establishing which markets have stronger demand for your product and fewer entry barriers before you visit or spend significant money going further.
Talk to your industry association or chamber for assistance and check out EDC's free online export market profiles.
When researching potential export markets, always look into:
- Levels of demand
- Potential supply chains
- Areas of growth
- Industry structure and established competitors
- Market routes (how you sell the product overseas might have to be different to how you do it here - see below)
- Required product modifications
- Cultural considerations (many an exporter has made the mistake of marketing or packaging their product without considering local traditions, meanings and colloquial sayings)
- Laws, standards, quotas, duties, taxes and important legal obligations
Consider hiring a specialist to research markets for you, visiting trade exhibitions or joining trade missions to help you research markets and make contacts.
How you take your product to market overseas may have to differ to the way you're used to doing it in Canada. Common market routes include:
- Sales agents who find you customers
- Sales distributors who buy directly from you
- Joint ventures
- Setting up physical branches
- Setting up an online e-commerce website
Investigate the options based on cost, feasibility and cultural preferences.
Exporting involves longer cash cycles. This has implications for your cash flow, so make sure you talk to us about:
- Trade finance options that can help you fill the gap
- Using clearly defined payment terms to ensure payment
- Ways to guard against foreign currency risks and exchange rate fluctuations
As an exporter you'll be asked to give credit to overseas customers. Always:
- Credit check every customer
- Research standard credit payment terms in the export market
- Use structured trade finance and trade credit insurance to protect yourself from the repercussions of not being paid
Even if you won't be filling out the paperwork yourself, you need to make sure you understand export documentation as you're ultimately the one responsible for the exports being 'ship-shape'.
Talk to your chamber, freight forwarder or financial advisor about:
- Numbered export invoices
- Standard shipping notes
- Dangerous goods notes (if the product contains hazardous material)
- Export licences
How are you going to get your product there? Don't just look at the costs; consider the climate of the export market and the countries the goods will be passing through too. If the products are delicate or perishable, you'll need to take this into account.
Talk to a freight forwarder about your options. They can consolidate your goods with other consignments - reducing the costs for you - and they can also take care of a lot of the paperwork too.
- Talk to your CIBC business advisor about the CIBC Small Business Growth Package and make sure you have the financial solutions you need to help you get your export operation off the ground.
- Check out the CIBC Guide to Business Planning to ensure you have covered all the bases as you plan to grow your business.