A crucial first step in planning is to develop broad consensus among key management personnel on the company’s goals, objectives, capabilities, and constraints. In addition, because they will ultimately be responsible for its successful implementation and execution, the personnel involved in the exporting process should agree on all aspects of an export plan. Of course at this stage of your business development, it may be just you, possibly a partner, and a few employees.
The purposes of the export plan are:
- To assemble facts, constraints, and goals
- To create an action statement that takes all of those elements into account
The plan includes specific objectives, sets forth time schedules for implementation, and marks milestones so that the degree of success can be measured and can motivate personnel.
Answer these 11 questions:
- Which products are selected for export development, and what modifications, if any, must be made to adapt them for overseas markets?
- Is an export license needed?
- Which countries are targeted for sales development?
- In each country, what are the basic customer profiles, and what marketing and distribution channels should be used to reach customers?
- What special challenges pertain to each market (for example, competition, cultural differences, and import and export controls), and what strategy will be used to address them?
- How will your product’s export sales price be determined?
- What specific operational steps must be taken and when?
- What will be the time frame for implementing each element of the plan?
- What personnel and company resources will be dedicated to exporting?
- What will be the cost in time and money for each element?
- How will results be evaluated and used to modify the plan?
The first time an export plan is developed, it should be kept simple. It need be only a few pages long because important market data and planning elements may not yet be available. The initial planning effort itself gradually generates more information and insight. As you learn more about exporting and your company’s competitive position, the export plan will become more detailed and complete.
From the start, your plan should be written and viewed as a flexible management tool, not as a static document. Objectives in the plan should be compared with actual results to measure the success of different strategies. Your company should not hesitate to modify the plan and make it more specific as new information and experience are gained.
A detailed plan is recommended for companies that intend to export directly, meaning selling to an end-user in another country. If your company chooses indirect export methods or sells via your or a third party’s website, you may use much simpler plans.
The Value of a Plan
Only about a third of SME U.S. manufacturers have a written plan of any size or kind. These companies began exporting by responding to an order and tend to react only when additional orders come in the same way, often via the Internet. No revenue targets for exports exist, and no one staff member is dedicated to growing the export business.
Absent a plan, your business may overlook much better opportunities. In addition, reactive exporters may quickly give up on selling to international customers, concluding prematurely that it’s not worth the effort or that it’s easier to serve customers closer to home even if that business may not grow, and could very well shrink, in the future. Doing the hard initial work of deciding how you want to develop and grow your international sales increases your chances that the best options will be chosen, resources will be used wisely, and execution will lead to a successful result. Remember that while 58 percent of all U.S. exporters export to only a single market (predominantly Canada), many small exporters sell to more countries than they have employees, and these sales account for a growing percentage of total sales, without which they’d be toast. These mini-multinationals are becoming more common, and your company can be one of them.
Some Additional Benefits of Plans
- Written plans display your strengths and weaknesses more clearly.
- Written plans are not overlooked or forgotten.
- Written plans may be required in seeking financing to build the export side of the business.
- Written plans are easier to communicate to others including new hires who come on board as your business grows. • Written plans assign responsibilities, keep you on track, and provide ways to measure results.
- Written plans allow for the articulation of unexamined assumptions about you and your business that can lead to new insights and better plans and results.
- Written plans give you a clear understanding of specific steps that need to be taken and help assure a commitment to exporting over the longer term. The plan represents a commitment to exporting. • With a written plan you’ll be less likely to ignore inquiries or actual orders from foreign buyers or not know what to do with them when they arrive.
A plan can help challenge assumptions, answer questions, and dispel fears, such as:
- “No one outside the United States will buy my product.”
- “I can’t think of a country market to target.”
- “Acquiring export expertise is too expensive or time consuming.”
- “If I can’t think of another country to enter, why bother with a written export plan?”
Length of the Plan
Your plan need only be a few pages to start, and you can use sections of this chapter to create one. The process of creating a simple plan will generate additional questions or areas of information needed. So your plan will evolve and become more detailed as you gain experience.
The Planning Process
Reading this book and acting on the information provided contribute to your export plan. Congratulations! You’ve taken a significant step toward planning for export success by thinking and acting strategically. Here are some important preliminary questions to ask and the answers will become an important part of the plan.
Product or Service
- What need does my product or service fill in the global marketplace?
- What modifications, if any, must be made to adapt my product for the overseas market?
- Do I need special licenses or certificates from my or the buyer’s government?
- Do I need to modify my packaging or labeling?
- How much will it cost to get my product to market (freight, duties, taxes and other costs)?
- Given an estimate of the costs of getting my product to the buyer, what is my pricing strategy?
- What, if anything, do I need to protect my intellectual property?
- What modifications, if any, should I make to my website to make it easy for potential buyers to understand the value of my product or service, to contact me, and to make a purchase?
- Should I sell my products on third party e-commerce platforms?
- What kinds of social media should I use to build awareness?
- Should I attend a trade show where international buyers are present?
Management Issues Involved in the Export Decision
- What are the reasons for pursuing export markets? Are they solid objectives (such as increasing sales volume or developing a broader, more stable customer base), or are they frivolous (for example, the owner wants an excuse to travel)?
- How committed is top management to an export effort? Is exporting viewed as a quick fix for slumping domestic sales? Will export customers be neglected if domestic sales pick up?
- What are management’s expectations? How quickly does management expect export operations to become self-sustaining? What level of return on investment is expected?
- With what countries has business already been conducted, or from what countries have inquiries already been received?
- Which product lines are talked about the most?
- Are any domestic customers buying the product for sale or shipment overseas? If so, to which countries?
- Is the trend of sales and inquiries up or down?
- Who are the main domestic and foreign competitors?
- What general and specific lessons have been learned from past export attempts or experiences?
Management and Personnel
- What in-house international expertise does the company have (for example, international sales experience and language capabilities)?
- Who will be responsible for the export department’s organization and staff?
- How much senior management time should be allocated and could be allocated?
- What organizational structure is required to ensure that export sales are adequately serviced?
- Who will follow through after the planning has been done?
- How is the present capacity being used?
- Will filling export orders hurt domestic sales?
- What will be the cost of additional production?
- Are there fluctuations in the annual workload? When? Why?
- What minimum-order quantity is required?
- What would be required to design and package products specifically for export?
- What amount of capital can be committed to export production and marketing?
- What level of operating costs can be supported by the export department?
- How are the initial expenses of export efforts to be allocated?
- What other new development plans in the works might compete with export plans?
- By what date must an export effort pay for itself?
- Do you qualify for export financing from government or commercial sources?
Information from https://www.export.gov/article?id=Export-Plan-Development