Knowing and understanding your core base of customers is key to any business, but diversification of your customer base can also play an important role in your company’s expansion strategy. Neil Kuschel, Sales Director at DHL Express UK & Ireland, discusses how SMEs can cost-effectively achieve this.
Growing your customer base can be a cost-effective way for companies to expand. Image courtesy of: sxc.hu
Even if your business is currently performing well within your domestic market, it can be a risky decision to remain trading solely in one market. If there is great demand for your product or service, you may find increased competition means the market becomes saturated, or a tough economic climate may mean the market dries up completely.
Expanding your customer base to overseas markets is a sensible solution. This will enable the business to prosper from new market demand or sustain growth by taking advantage of more hospitable economic climates.
You need to know your sector, and the strengths and weaknesses of potential markets. Carrying out detailed market research into the countries with which you wish to trade is crucial in order to make sure your expansion programme is successful and profitable. You may wish to consider questions such as, is there a gap in the market in the country you are trying to trade with - or conversely, are your competitors the market leaders in the product or service you are trying to export? What are the main attractions of trading with that country? - e.g. is there a favourable exchange rate, lack of red tape and bureaucracy or is it easy to set up an overseas bank account in that country? Favourable exchange rates in Australia and booming GDP figures in Indonesia for example, are exactly the type of facts businesses need to be aware of when initiating an international trading programme.
Based on research, create a strong export plan. This will be key for your business to begin trading internationally. Preparing a plan in advance will help you have oversight of the whole operation, anticipate future goals, assemble facts and identify any potential difficulties. Before you enter the market you should define every step of the export process within your plan, from entering the market to the final distribution of goods.
Exporting will have a financial impact on your business - don’t forget to monitor exchange rates as their fluctuations could make a difference to your bottom line. Take into consideration extra costs such as transport, insurance, and shipping your goods - be aware that a smaller shipper, although initially cheaper, may exclude fees and charges from the upfront cost. Also bear in mind that overseas the wait for commissions, orders and payments may take longer than in the domestic market.
Customs and regulation
These can make or break your success. Every country has different regulations, with some more complex than others. China offers fantastic potential for UK companies in terms of trading, but its complex customs legislation mean that navigating the world of exporting can be challenging. For example, did you know that it is prohibited to export beef from the US to China? Or that businesses are not allowed to import popcorn into New Zealand? Whatever the “quirky custom,” working with an experienced third party carrier will ensure that you are aware of it.
Importance of online
The recession has driven consumers online in a quest for cheaper deals and as a result, businesses not set up to meet this demand are finding themselves left behind. Multichannel services are essential for businesses looking to take their first step into overseas trading, as if you don’t have a physical presence in the market place, the company website serves as the shop window. E-commerce opportunities in the Gulf countries have been identified for fledgling exporters, driven by a young population with disposable incomes, and also China, where the offsite retail infrastructure is less developed and therefore susceptible to e-tail monopoly.
Seek help and advice
UK Trade & Investment
(UKTI) offers a range of services for UK exporters, including a flexible business tool called the Overseas Market Introduction Service
(OMIS). The British Chambers of Commerce
(BCC) also offers export training services.
Neil Kuschel, Sales Director, DHL Express, is responsible for overseeing sales in the UK, particularly within the business and SME sector. He has previously worked out of DHL’s Sub Saharan Africa (SSA) head office in Cape Town, South Africa where he was responsible for the strategic development of sales, marketing and customer service functions for 49 countries in that area. Kuschel is now focused on giving guidance to SMEs on issues such as importing, exporting, emerging markets, customs regulations and cultural differences - all of which can impact the smooth running of the business.