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With 95% of global consumers located outside the United States and growing foreign competition domestically, selling internationally can help U.S. businesses of all sizes increase their competitiveness and achieve real business growth. Too often, however, new exporting firms will devote valuable time and resources to developing markets that may not offer the greatest potential for growth. By investing time and effort up front, you can position your business for success in the global marketplace by developing an export plan.
Newly exporting companies should consider two points when considering expanding internationally: (1) your company’s export readiness, such as management support to internationalize, resources (time , personnel and financial means) necessary to develop a new market, and a realistic understanding of the time it takes to develop a new market, and (2) the export potential of your product or service.
An export plan can help businesses answer these questions. An export plan is a business plan for your international business and it will be part of your company’s overall business plan. Much like a business plan, an export plan helps you understand the facts, constraints, and goals of your international effort. A written plan provides a roadmap for your business to help your business respond more effectively and confidently to international demands, can help you optimize your business operations for exporting, and may be necessary if you are seeking financing to expand. your export transactions such as a working capital loan. An export plan will take into consideration the following: the export potential of your product or service, identifying potential customers, export prices, production, financing and resources.
Four basic steps to create an export plan
1. Identify the export potential of the good or service to be exported:
Generally, the success of your company’s products or services in the US market is a good indicator of the success of your product or service abroad. Another factor to consider is the uniqueness of your product or service. If your product is the first of its kind or technologically advanced, there is a good chance that it will translate into overseas success.
2. Identify target markets:
Where can you successfully sell your product? Here you will take a look at which countries have a demand for your product or service.
- What is the competitive environment of your target market?
- Does the target market require product registrations or certifications, is a license required for export?
- What about the Free Trade Agreement countries? A free trade agreement is an agreement between two or more countries where countries agree to certain obligations, which usually include reduced tariff rates and better market access. The United States has 14 free trade agreements with 20 countries. These are often the first export markets for American companies because of the advantages they confer. For example, Canada and Mexico are among the top export markets for the United States and the top two export markets for Pennsylvania. English being one of its official languages and its geographical proximity, Canada is the first export market for many first-time exporters.
3. Decide on a pricing strategy:
Conducting a cost to land exercise will help you determine your competitiveness in a target market. Landed cost – or total cost of delivery – is the total price of a product once it has arrived at a buyer’s doorstep. At a minimum, the landed cost includes the original price of the product, marketing, all transport costs (domestic and sea or air) plus duties and taxes. Once you add these costs to the original price of your products, can you sell your product to the target market? The landed cost of a product exported from the United States to Brazil, for example, can be double the original price.
4. Define a strategy to find foreign buyers:
To find foreign buyers, you will need to understand your customer profile and what marketing and distribution channels are needed in each market to reach your customers. Market entry strategies can include direct sales to an end user, cross-border e-commerce, indirect sales using a local sales agent, representative or distributor, or any combination of these elements.
Keep the plan simple and dynamic. Initially, the plan should only be a few pages. As you gather more information and ideas, the plan will become more detailed. A sample export plan is available here: https://www.trade.gov/sample-export-plan.
Think of the US Commercial Service’s Pittsburgh office as your one-stop-shop to connect you with the resources you’ll need to develop and implement your export plan. Please visit our website at https://www.trade.gov/pennsylvania-pittsburgh or contact our office at (412) 644-2800.
Lee anne haworth is a Senior International Trade Specialist in the Pittsburgh office of the US Commercial Service.
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