The lure of abroad on business is often very powerful, and many are those who wish to conquer new markets beyond our borders. How do we not to get hurt?
Before even thinking of embarking on the conquest of new markets, it is essential to have a solid foundation. "Starting to export is equivalent to revive a deal out of nothing. This requires that the company is already profitable and has sufficient resources, "says Jean-François Ouellet, teacher, entrepreneurship and innovation, HEC Montreal. Let us not forget that it takes about three years for a company begins to draw fruit exports, so she must have deep pockets!
Analyze the market
This is not because a product sells well here it will have the same success in other places. This is why Mr. Ouellet advises entrepreneurs to thoroughly analyze the coveted market and learn about it before even attempting to enter. In addition, business fairs, trade fairs, chambers of commerce, etc., used to meet directly with the people who are already doing business in the country that interests us or come into contact with them.
"However, nothing beats a site visit and a good handshake! "To feel the pulse and be familiar with the local culture, says Ouellet. In this area, the differences can be enormous from one country to another, so watch the odd. For example, in Japan, it is fashionable to extensively examine the business card given by his interlocutor, not storing it quickly in his pocket. Educate yourself!
Anyway, it should not rush or take hasty decisions. "Exporters who have succeeded are those who took their time", said for his part Normand D'Arcy, Director of International Services at National Bank.
Testing the waters
Another great resource: the financial institution. "At National Bank, when a client company intends to do business abroad, director of international trade is assigned. This will assist the customer account manager to analyze its strategic plan, study the issues and propose solutions, "says Benoît Marcoux, director, derivatives and Business Solutions International, International Services at National Bank.
The bank has several offices abroad, in addition to having developed partnerships with leading local financial institutions, allowing to share experiences.
To test the waters before making the jump, Jean-François Ouellet recommends to use the Web, an inexpensive method to assess the market potential. One can, for example, obtain client lists and contact them by email to whether our product is likely to interest them. "By conducting thousands of items, you will get a good sample of responses," he said.
Benoît Marcoux stressed meanwhile that the contractor must remember that the export will require adjustments to business processes. "These are not the usual transactions for the enterprise paradigm and environment is changed. We must therefore make some adjustments, particularly in marketing and marketing. "
Measure risk
D'Arcy Norman recommends commit financial institution in the project as soon as possible, even before signing contracts with foreign customers. "This reduces the risk from the start. We can give advice, provide funding to support the production or help support longer payment periods, for example. "
As for the currency conversion rate, he can play for the exporting company ... or against him. "For several years, there has been high volatility in currency markets, which sometimes results in variations of 10 to 20%, which significantly reduces the profit margin of an exporter or discarded. To guard against this, we can sign a futures contract, that is to say, agree on a predetermined exchange rate on a specified date, "said Mr. Marcoux. Such an agreement allows to fix the exchange rate to be used at the time of delivery.
Another element to consider in its planning: the various payment methods. "In the US, the account is generally used, while in Asia it is rather the letters of credit," says D'Arcy. They each have their terms, you better know to avoid unpleasant surprises.
5 STEPS TO SUCCESS
1. Discuss projects with their financial institution.
2- Evaluate the company's ability to adapt to change.
3. To deepen his knowledge of the local business culture and evaluate the potential of the target market.
4. Establish processes including financing and risk mitigation, with its financial partners.
5. Respect the plan that one has set!
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