*By: Antonello Bove
Many a business reaches the point where it outgrows its market. The company has a solid, sought-after product, but finds that it will not be able to sell much more in its current market, be it because it already supplies the whole market or because stiff competition means it has to look elsewhere to continue growing.
In such cases, a company will typically look to different regions within the same country. Rather than just selling tires in the capital, it will sell them throughout the country. After all, people don’t drive cars only in the capital city.
But what happens if a business’s products are already being sold across the whole country or if demand is limited to a particular region that it already dominates? At that point, many business owners consider the possibility of exporting.
If your tires are a hit in Panama, why not sell them in Costa Rica as well?
After that conclusion has been reached, comes the tricky part: Where to begin?
Thorough planning from the start is the best way to achieve success. From the beginning, a company must be clear about where it is headed and how to get there. With that clarity, there will be no surprises along the way and a company will be prepared for all eventualities.
All planning should be drafted in a strategic document called the business plan. The business plan shapes the management of the export project.
Business plans generally have a standard structure, and, in addition to the export sector, can be used for any kind of business activity, from manufacturing to retail sales and services. A business plan is a useful tool that is both a personal compass and a means of sharing a project with others, such as a bank where you want to request financing to fund the expansion into Costa Rica.
Here are seven steps for export success:
Step 1: Executive Summary
An executive summary, the most widely-read part of a business plan, succinctly describes the project and offers a general overview. It is generally written once you have a complete picture with well-defined targets and milestones.
Step 2: Company Description
A brief description of the company, what it does, the products and services it offers, and how it plans to absorb the growth proposed in its plan. In other words, if you want to export to a new country, who takes care of what? Who would manage the process? Does the company have the capacity to produce more?
Step 3:Product and Process
The next step is to describe in detail all current and future products and services, as well as the product life cycle from procurement of raw materials to sale to the end consumer. At this point, the plan should emphasize the competitive advantage of the product and related products—a key part of competitiveness.
Step 4: Market Analysis and Marketing and Sales Plan
The next step is to analyze the market. The plan describes the target consumers of the product, including their lifestyles and geographical locations. It is important to know who would buy your tires and where such people can be found. You then use this information to design a marketing plan.
The market analysis and marketing plan are the foundation of the sales forecast, since they directly influence the sales and sustainability of the whole business. The company uses these analyses to create a sales budget.
Step 5: Competitive Position, Milestones, and Risk Analysis
The company must now analyze its competitive position, summarizing its competencies and setting out the targets and milestones it hopes to achieve through the business plan. It may be the case that you want to start out selling tires in San José and then, after the first year, expand to the three largest cities in the country. If you have a written strategy, you can measure progress over time and anticipate any potential problems.
Step 6: Management and Organization
Now it’s time to explain who will oversee the implementation of the project, including details on its basic organization and who will evaluate the plan. This is a key step as it helps to determine if the management team and company as a whole are able to develop and implement the proposed project. If the company is not ready to export to a new market, you should start by preparing the company and then take the leap at a later date.
Step 7: Financing
Finally, you have to explain the current financial situation of the company and how it will adapt moving forward. It is important to include key indicators such as the main financial ratios and basic documentation such as profit and loss statements, the balance sheet, and cash flow projections.
Designing a business plan for expansion abroad may initially seem complicated, but in the long run, it helps a company avoid making mistakes and ensures it has clear objectives from the outset. For over five years, the Inter-American Investment Corporation (IIC) has been working with small and medium-sized enterprises in Latin America and the Caribbean to help them export. Many companies are interested in exporting, but few know where to begin.
Our FINPYME ExportPlus program provides companies with the techniques, tools, and knowledge necessary to expand into new markets. Today, we are launching FINPYME ExportPlus in Ecuador, the fifteenth country to benefit from the program.
We understand that not all the companies interested in exporting can be here in Quito today. That is why we have gathered all the information included in our training sessions and made it available to everyone through our free online courses.
If you would like to learn more, register and find out how to export your tires to any country. And, if tires aren’t your thing, why not rubber ducks or candy? The next course starts on June 8. http://academy.connectamericas.com/web/418989
* About the Author:
Antonello Bove is a senior consultant at the Inter American Investment Corporation with the Technical Assistance and Strategic Partnerships division. He is responsible for the FINPYME ExportPlus program, whose purpose is to enhance the capacity of small and medium-sized Latin American and Caribbean enterprises to access export markets. Antonello’s expertise includes Project Management, Corporate Strategy and International Business. He has managed projects and activities internationally for more than 20 years in the private and government sectors. He has taught international business at the University of Evansville (Indiana) and has authored four books on strategic and business planning, project management and management skills.