Exporting can be a source of opportunities to boost your business, increase competitiveness and diversify income; however, exporting requires a process whose challenges can lead to problems if not addressed correctly. In this article, we highlight the 10 most common exporting mistakes and key strategies to avoid them.
1. Not carrying out a prior market study
To launch into exporting without having carried out an analysis of the target market is a very common mistake. Without an analysis of the sector’s situation in the target market, of the existing competition, as well as of specific regulations, the company may face problems such as low demand or unfamiliar regulations. To avoid this, it is necessary to research the demand flows for the product in the target country, analyse the competition, take into account regulatory, cultural or logistical barriers and other aspects that may influence the marketing of our product in a specific market.
2. Not adapting the product to the target market
We cannot assume that our strategies and products will work in other markets in the same way as they do at home. Each country has its own regulations, needs and requirements. To ensure success in the process, it is necessary to carry out tests with local consumers, adapt the design and packaging of the product and make sure that it complies with the regulations of the target market.
3. Ignoring the real costs of exporting
The export process can be tedious and is subject to a number of costs related to logistics, tariffs, certifications, etc. These costs, if not anticipated, can considerably reduce the profitability of the product. To avoid this problem, it is necessary to calculate all the costs to which the product will be subject during the process and which will influence the final retail price. Consulting trade agreements, tariff costs, transport, storage and insurance will determine a reliable and realistic structure of export costs.
4. Not having an adequate entry strategy
To think that a single commercial strategy is applicable to any country is a mistake that can generate a bad reputation as well as a loss of trust among potential prospects. To minimise these risks, we should define the entry options and the channels we will use, as well as establishing a marketing plan adapted to the national context to which we are directing our proposal; it is essential that our message and strategy are in line with the cultural context of those we are contacting.
5. Ignoring legal and regulatory requirements
Each country establishes its own specific regulations for imported products, and failure to comply with them can result in delays or, in the worst case, be banned from the market. To avoid these obstacles, we will conduct a preliminary investigation of the regulations regarding labelling, safety and quality before starting the export process. Obtaining the relevant certifications or consulting specialised consultants will guarantee that the product complies with legal requirements and that there will be no problem in marketing it.
6. Inefficient logistics chain
In an international transaction, in which there is a distance of thousands of kilometres between the point of departure and the point of destination, logistics planning must be efficient and organised; poor planning can lead to delays, product damage, unnecessary and unforeseen cost overruns, etc. In order to optimise this process, it is necessary to have trustworthy logistics companies, to have tracking technologies to monitor the goods and to establish realistic delivery times that allow commercial commitments to be met.
7. Failure to properly define payment and financing terms
Lack of clarity in payments can lead to liquidity problems and increase the risk of non-payment. Defining payment terms is key to ensuring the financial stability of the operation. Checking the creditworthiness of the customer before closing deals and considering credit insurance can help reduce risk as well as protecting the company’s cash flow.
8. Incorrect application of Incoterms
Incoterms define the responsibilities of buyers and sellers in an international transaction, and their incorrect application can generate risks in the operation derived from confusion in the costs to be faced by each party. To avoid possible misunderstandings, it is essential to know Incoterms and define them correctly in sales contracts.
9. Overlooking cultural differences in negotiation
Each country has cultural peculiarities and habits that are also reflected in the commercial sphere. Failure to take these cultural differences into account can create conflicts that can affect relationships with clients and potential business partners. This is why it is so important to research the negotiation and communication protocols of the country we are targeting, adapting our message to its cultural norms and personalising our strategy to suit each market.
10. Not having a risk management plan
Exports can be subject to fluctuations in the exchange rate, economic crises, political conflicts, logistical problems, etc. In order to minimise these risks, it is advisable to diversify markets to reduce dependence on our exports, as well as taking out transport and currency exchange insurance. In order to anticipate these possible risks and make appropriate decisions, it is crucial to keep informed about the economic and political situation of potential destination countries.
CONCLUSIÓN
Avoiding these mistakes and knowing how to respond appropriately can make the difference between success and failure in international trade, and many of these mistakes can be anticipated with proper research and an organised and defined plan.
Exportest offers you a complete questionnaire from which it will develop a diagnosis of your company’s situation according to each area, with advice to facilitate the process, as well as identifying your strengths and weaknesses. You will also benefit from a market selector that will identify the most interesting markets to which you can direct your proposal; you can contract Exportest through this link.
Exportest has been developed by Oftex, an internationalisation consultancy with more than 20 years of experience. Visit our website to find out about the rest of our services.
Exportest, your fast, rigorous and economical internationalisation plan.