Export Readiness Self-Test Survey – Company Focus
The ’15Q Export Readiness Self-Test – Company Focus’ is a web-based survey assessment designed for:
- Companies that see exporting as a possible new or expanded activity but are uncertain about their export potential or prospects.
- Export counselors who need a fast, user-friendly way to “qualify” new clients for export assistance.
- Individuals who are interested to consider import-export as an international business venture, second career or second life…:)
This self-test consists of 15 questions that prompt you (as an exporter) to consider your export resources, marketing capacity and management commitment to increase your odds of success in the export market. Ready to try it out? We assure that your responses will be kept private and confidential.
If you prefer to understand the meaning of the answers to these 15 questions, I shall spoil your fun by showing you those 15 questions now.
Question 1: How establish is your brand in your local/domestic market?
Recognition and acceptance within your industry are important assets in exporting. Foreign buyers need to feel that they can rely on and trust you (as a supplier) over the long haul. Unknown suppliers have greater risks than firms with established credentials.
If you’re already well known and respected domestically, you have a head start. This means that you have a demonstrable, time-tested record of stability, reliability and relevant experience in filling orders, servicing the product, and managing inventory and costs. You’ll want to reinforce that image in your overseas promotions.
If you’re less known or unknown, you’ll need to build credibility and confidence to reduce your buyer’s perceived risk. For example, you will need to:
- emphasize customer support in your promotional activities,
- consider price and other incentives to attract interest,
- respond promptly and professionally to inquiries, orders and customer requests for service,
- consistently under-promise and over deliver buyer’s expectations
Question 2: How extensive is your current domestic sales outreach?
Your sales force are your key personnel to help you bring in the cash. Work together with them and keep them ‘hungry for success’!
If you’re already selling to a large nationwide customer base, exporting is a logical next step. You’re already familiar with long-distance administrative, distribution and promotional techniques of the types used in exporting. You’ve already shown you can succeed throughout the domestic market, where you’re already competing against foreign imports as well domestic products. This is the same competition you’d likely face in almost any export market. National exposure has also made you more visible to potential foreign buyers visiting or operating domestically.
If you’re only selling locally or regionally now, you’re best off broadening your domestic sales base before you try exporting. This will ease the transition. It will increase your exposure to customers, competition and long-distance marketing techniques. Thereafter, you might begin testing your export market appeal in a few selected countries, either on your own or by working through a domestic export intermediary.
Question 3: How do you sell and distribute your products in your domestic market?
Exporting requires an effective overseas sales and distribution network. Most exporting is done through local agents or distributors in each market. These market “insiders” speak the language, know the market, and know where the customers are and how to reach them. Their role is to develop and send you sales orders, arrange payment in dollars, prepare all required import documents, and clear your goods through customs. Many of them specialized by industry and are equipped to stock, install and service the goods. The end-users in the market know and prefer to deal with these local representatives, rather than to buy direct from you or other foreign suppliers. Although you could attempt to represent yourself through your home office or your own sales offices abroad, the benefits of increased “control” may not justify the costs. Unless sales volume warrants, you’re better off finding good agents or distributors to represent you.
Choosing the right sales representative is crucial. You’re relying on them to be your eyes and ears in the market and bring you sales. If they don’t perform as expected, you may not be able to switch. In some countries, you can’t easily terminate an agent/distributor relationship. Therefore, you want to be careful and selective in your search. The more you know about selecting and managing distributors, the better off you are.
If your company already has a domestic sales force, especially one with regional distributors, you have an advantage. Even if you have little or no prior experience, you can possibly get “rep-find” help from a number of federal, state, county, and college-based trade assistance organizations in your locality.
Question 4: Do you customarily conduct market research and planning for your domestic operations
Systematic market planning is essential to exporting, just as it is in your domestic business. As the old adage goes, unsuccessful companies don’t “plan to fail, they fail to plan.” Successful companies collect and use information to achieve an edge over the competition and to set realistic goals, budgets, strategies and timetables for future effort. Analysis and planning are even more critical overseas, and it can be instrumental in avoiding costly mistakes. You can’t assume that what has worked for you domestically will work overseas. Exporters encounter different income levels and demand cycles abroad; different languages, cultures and environments; different laws and regulations; different ways of doing business; and different risks (e.g., foreign exchange fluctuations, civil strife, nationalization, etc.). Long-term success in exporting requires an awareness of these differences, an accurate assessment of the resulting potentials and pitfalls, and a strategy to deal with them in each target market. A “seat of the pants” approach runs a high risk of failure.
Help is available if you need it, and costs need not be high. You can gather international marketing information from many sources via online portal like GlobalSources.com or tradeshows around the world like Exhibitor Online. These contain the latest trade statistics; country-specific commercial guides; industry-specific market surveys and trade contact lists; and relevant trade laws and regulations affecting market access in specific countries.
Question 5: To what extent do you advertise and promote your products /services in your domestic market?
Whether you export directly or through intermediaries, you’ll need to get your name out there to make your presence known. Although export promotion can be tailored to fit your budget, the more you do, the more results you’ll likely see. When you export, you’re competing not only against potentially better known exporters from your own country, but also against domestic and third-country competitors vying for the same target market. They might offer price discounts or liberal credit, improve their product, “pull strings,” or take other steps to counter your presence. You’ll have to contend with them while you’re also trying to gain more market recognition for yourself. Since foreign buyers can’t be presumed to already know or want your product, you’ll have to educate, impress and motivate them. Thus, if anything, unless your product essentially sells itself, you’ll probably need to promote even more aggressively abroad than you’ve done domestically.
Most countries have adequate media, which can support any of the promotional methods that would normally apply to your products, including direct mail, telemarketing, press releases, paid ads, trade shows, sales trips, Internet directories and Web pages, and e-mail. However, some techniques may work better than others in particular markets. Costs could also affect your approach. Certain techniques clearly cost more if done from afar, such as direct mail, telemarketing and business travel. These techniques might best be carried out by your overseas reps, possibly on a cost-sharing basis. If your promotion budget is limited, there are low-cost ways to market and promote abroad. For example, trade offices in your export market may run matchmaking services that can get you worldwide exposure for your company and products, generate trade leads, and find qualified overseas distributors for you at modest cost.
Question 6: Do any of your current managers or staff have export marketing or sales expertise dealing with your targeted foreign customers?
You don’t need to be an expert to export. If you prefer, you can use outside experts to deal with the complexities, including export intermediaries, freight forwarders, and overseas agents and distributors. Between them, they can represent you, find overseas customers, present you with sales orders, handle all the export paperwork, and deliver the goods. You fill the orders and get paid for the sale. You pay them a fee or commission. That’s not too complicated. However, if you opt to do your own exporting, you’ll need at least some expertise.
There are key differences between domestic and foreign selling which must be understood and accommodated. These include different methods of calculating costs and quoting prices, different payment terms and methods; different currencies; different documentary requirements for invoicing, packing, labeling and shipping; different forms and levels import barriers; and different legal systems, laws and regulations. Also critical are differences in language and culture among and even within countries. What is customary, appealing or innocuous in the domestic market might well be misunderstood or offensive elsewhere. Even experienced multinational companies have made mistakes in this environment. To avoid costly blunders, it’s wise to invest in continual training for new as well as experienced staff.
Question 7: Has your company received any unsolicited inquiries from foreign firms?
Unsolicited foreign inquiries are a strong indicator of export potential. They offer tangible proof that you have been discovered abroad. You may not know how or why, but count it as a plus that someone overseas has taken the initiative to search you out. Many companies say they first started exporting only after and because they received unsolicited inquiries. Although some foreign inquiries may be “fishing expeditions,” many are serious expressions of interest from firms seeking new or better products. They represent immediate or potential “money in the bank” for you, and deserve your prompt, solicitous response, even if you’re not currently able to export the product.
If you haven’t been approached yet, don’t be discouraged. A likely reason is not lack of interest, but lack of awareness. You and your product probably just aren’t known abroad, either favorably or unfavorably. You need exposure abroad to pique interest and demand. You can even do this indirectly as part of your domestic marketing. Try articles or ads in industry journals with international circulation. Consider exhibiting at a major domestic trade show known to attract foreign buyers. For direct overseas exposure, the Internet is a low cost option and may well trigger an avalanche of unsolicited orders or inquiries. Increasingly, companies are creating their own Web sites to promote their products. You can also gain worldwide Internet exposure through Internet export directories or by posting your own sell offer in Internert trade lead systems.
Question 8: Could you promptly fill any new export orders from present inventory or other sources?
Exporters should be able to respond promptly to any new orders they receive. Foreign buyers typically can buy from various sources, and if you can’t fill the order when they want it, they’ll usually find someone else who can. You don’t want to start or impair a relationship with delays and apologies. If you have idle plant capacity, you’re probably in a good position to fill any new orders. You may already have inventory on hand, or you could increase production fairly quickly without needing more workers, materials or equipment. With that flexibility, you can go after new export business as aggressively as you wish. However, if prompt delivery is a problem, you’re better off not soliciting new export business until you’re better able to respond. One option is to start slowly and selectively. If the response warrants, you could begin an orderly expansion to meet the combined domestic and foreign demand.
On occasion, you may get an export order too good to pass up even if you’re not ready. In these cases, particularly for unsolicited orders, the buyer may not have alternatives and may be willing to wait for your product.
Another way to work around such problem is to get a working capital loan. For example, if you need up-front money to produce or acquire the quantity sought in the US, you may be eligible for a Working Capital Loan Guarantee from the Small Business Administration (SBA) or the Export-Import Bank (EXIM). SBA or EXIM will guarantee 90% of a commercial bank loan to enable an exporter fill an export order, in effect using the purchase order as collateral. The money can be used to procure additional labor, equipment or materials as needed. The loan is then paid out of the proceeds of the sale.
Question 9: How would you handle any new or additional export business within your organization?
New or additional export business will create added and more specialized work for the company. Successful exporters typically assign at least one specialist to the export function. Larger exporters usually have their own export department, with one or more specialists handling specific functions. Top managers often handle specific export tasks in smaller companies. They may or may not do this in larger companies, but they should at least provide active oversight. However you choose to organize, you’ll need managers and staff that can handle the extra load and know what they’re doing. Foreign customers have little tolerance for errors, bottlenecks, backlogs or delays that can create complications and add to their costs. If necessary, they can and will find more reliable suppliers.
Thus, if you’re now understaffed, or your current staff lacks key export skills – in planning, market development, promotion, shipping, documentation, collections, etc. — you’ll need to add experienced staff or train your existing staff. Even if you rely on outside freight forwarders to handle your shipping and documentation, it’s still best to have some internal familiarity with these procedures. If staff upgrades aren’t feasible, you’re better off exporting through a domestic intermediary.
Question 10: What is the current status of your export activity?
Prior export experience is a definite plus, but not a prerequisite. It proves that you have an exportable product and that you can sell it competitively in at least some markets. It also suggests that you appreciate the significance of exporting to your bottom line and already have some experience in the mechanics of exporting, such as documentary, financing, shipping, distribution and marketing procedures. If you have not previously exported, you lack the experience but not necessarily the potential to export. Every experienced exporter was at one time a non-exporter. Experience, while obviously an advantage, is not a necessity if you export through a domestic intermediary. If you’d rather handle your own exports, you can overcome initial inexperience by hiring a professional or training someone in-house. Be sure to make use of government and private services available to help you along the way (e.g., Department of Commerce, state and local export assistance centers, freight forwarders, banks, etc.).
Question 11: How much per year could you afford to spend on export development?
Costs of exporting can be kept low, but can’t be avoided altogether. If you’re starting from scratch, as with any business, you’ll face the usual start-up costs for an office, furniture and equipment, supplies, etc. As a beginning exporter, you’ll have some up-front research costs to identify your best markets. To enter and develop these markets, you’ll incur costs to gain exposure, set up sales and distribution networks, and attract customers. As your exports increase, you might translate your sales literature, take overseas business trips, do more media advertising, and participate in trade shows abroad. In some countries, you may have to redesign or modify your product to meet local requirements or customer preferences. Generally, the more you spend to prepare, promote and adapt for export, the greater amount of return you should expect (don’t forget to focus on 20% effort for 80% results). Clearly, firms with stronger, more flexible resources are in the best position to finance an export venture. That doesn’t mean you have to be “big” to export. While bigger firms can afford to do more, most firms now exporting are small businesses.
So, don’t be deterred if your funds are limited. You can start even on a tight budget. The key is doing the most with what you have. You could be fairly aggressive on an export budget of $75,000-150,000 per year and be very aggressive above that. If you can’t afford that much, there are low-cost ways to market and promote abroad, handle new export orders, and finance receivables. These don’t require hiring new staff or setting up an export department. For example, in US, low-cost help is available from U.S. Department of Commerce Export Assistance Centers, state export agencies, and international trade assistance centers located at universities and community colleges. At no cost in some cases, or modest cost, you can get worldwide market exposure, generate trade leads, and find qualified overseas distributors to represent you. If internal funds are not available for export start-up or working capital, consider export financing programs offered by the Small Business Administration (SBA) the U.S. Export-Import Bank (Eximbank) or state agencies.
Alternatively, you could save up-front costs by exporting through intermediaries, who already have relationships abroad and will incur some or all of the initial costs to find you customers and generate orders. You mostly pay only when and if any business actually results, usually in the form of a commission based on a percentage of the sales price. Export trading companies typically buy goods outright from domestic producers for eventual resale abroad. You, as the producer, would get paid right away and would also benefit from exposure of your product abroad.
Question 12: Have domestic sales of your company’s product/service grown over the past 3 years (average per year)?
A strong domestic sales performance is a good indicator of export competitiveness. If your domestic sales are increasing, or have at least kept pace with your competitors, you’re likely to be competitive abroad. You’ve already shown strength in the domestic market against the same domestic and imported foreign products you’d likely face in export markets. Exporting is definitely a step to consider. Even if your domestic sales have been weak, don’t necessarily assume you’ve lost competitiveness and can’t export. In fact, if your sluggish sales are mainly due to a domestic economic slowdown, or to product obsolescence, exporting may be just the ticket to turn things around. When the domestic economy stagnates, other countries may be booming. As their production and consumption increase, their import demand also rises, including for domestic products. Exporting to markets in higher growth cycles could be very profitable. Similarly, if technology advances have made your product obsolete in the domestic market, it could still conceivably sell very well in less-developed countries where older technology may suffice or even be preferred. Over half the world’s economies are less developed. They may not need or can’t afford your latest model, and you should be able to offer substantial competitive discounts for your older model.
Question 13: What is your export-able product/service’s current market share in the domestic market?
Market share is a key indicator of product competitiveness, whether you’re selling locally, regionally or nationally. If your market share is already high or growing, or at least holding steady, your company likely has fundamental competitive strengths; e.g., attractive pricing, uniqueness, high quality, strong service and customer support, or other. These competitive assets are as appealing to foreign buyers as domestic. If you’ve been able to meet or beat the domestic competition for these reasons, you should also be competitive abroad. In many cases, you’ll be facing the same competitors abroad that you’ve already done well against domestically.
Conversely, a low or declining market share reflects competitive weaknesses. This shows the lack of exporting potential. Because competition is even more intense overseas, the chances are that you would do no better overseas, and probably worse. However, this could depend on the reasons for your low domestic market share. For example, if product obsolescence is the reason, exporting may offer a new lease on life. Other countries, particularly lower income or less developed countries, may not need the latest technology and may value yours for its presumably lower cost.
Question 14: Is your top management committed to exporting as a new or expanded area of activity?
A motivated management is a prime factor in export success. Other export needs can be acquired, such as financing, experience and market exposure, but exporting requires strong management commitment and support over the long haul.
There are good and bad reasons to export. The primary motivation should be to increase sales, profitability and growth over the long term. Exports can contribute in many ways – they help broaden and diversify existing markets, reduce vulnerability to domestic slowdowns, match or preempt competitors, extend product life-cycles, exploit superior proprietary technology, use idle capacity, and reduce unit costs through economies of scale.
If management pursues exporting for these sound reasons, it will more likely make the necessary long-term commitment. This support is critical, because exporting is not a spigot that can be turned on and off at will. It requires patience and adequate resources to develop markets and long-term relationships. If your management sees little or no benefit in exporting, views it as a possible sideline, or has more opportunistic motives for exporting – unload surplus inventory, offset a domestic slowdown, fill occasional unsolicited orders – it probably won’t support the effort at critical times. In these situations, it’s generally best to avoid any major export initiatives until management is more incline to expand internationally. Instead, opt for a low risk, “go-slow” approach, such as exporting through a domestic intermediary or using available low-cost services to attract foreign inquiries or find overseas agents. If these steps produce initial results, they will help your management to build up its confidence and commitment in import-export activities.
Question 15: How long would your management be willing to wait to achieve acceptable export results?
Don’t expect immediate results from exporting, even with a good product in a promising market. Patience is a virtue and perhaps a necessity in international trade. It takes longer for export “seeds” to develop and return profits – sometimes several years. While the payoff may be shorter or longer in your case, you’ll need time to establish market identity abroad, select distributors, attract buyers, and build solid relationships with your distributors and customers. These efforts will ultimately result in high, ongoing sales and profits.
If you’re under pressure or you can’t wait to reap success in your exporting activities, there are some steps you can take to try to generate fairly quick inquiries and orders. At a fairly low cost, you can use mail list, “repfind,” trade lead, and promotion services available from the Commerce Department, state export agencies, and local trade assistance centers. These places can help you to contact potential buyers, find qualified overseas reps, and promote your product in promising markets. A more costly approach for fast results might be to exhibit at a promising overseas show, where buyers can see your product and possibly order it “off-the-floor”.
Whew…there you go – the top 15 questions to get yourself ready to enter the trillion dollar international trade market. Why not give it a go and see how you fair? There’s no pass or failing grade, just a simple ‘reality check’ on how remarkable is your company when you step up your effort to compete globally. Ready?
Still hesitating to try it out yourself? Why not read our FAQ page on how we keep your responses private and confidential.
Got better ways to improve those questions? Add your comment now as we would like to hear from you!
Acknowledgement: Special thanks to Maurice Kogon, Director for International Trade Development from CITD for making available those export readiness questions for exporters
Please note: The information contained in this survey should not be solely relied upon for the purposes of making a final import-export business decision. It is general information only. You should consider your own personal circumstances, financial position and objectives before making any decisions.
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