The benefits of exporting

December 21, 2007, 1:59 pmKBB

It never ceases to amaze me just how prolific Australian companies have become in the export arena.

When Australia’s selling coffee to the Italians and wine to the French you know our exporters are doing something right.  In fact, for a country so far removed physically from trading partners in the United States and Europe it never ceases to amaze me just how prolific Australian companies have become in the export arena… and not just the big players.

I’ve met many small business owners who’ve successfully cracked the export market. You might ask why bother, when it would seem the domestic market is big enough to provide custom for a small business?  Exporting isn’t just about increasing sales, I like to think of it as being similar to using diversification in a share portfolio – it’s about spreading risk and increasing your exposure to different markets.

Australia’s economy has been pretty solid in recent years, but when it inevitably turns down businesses with revenue streams from other economies will be less likely to feel the pain.  This goes for the cycles within your own industry or individual business as well; export markets can extend the life of a product which has reached the end of its cycle domestically.  Both these factors can help smooth out your own business management, reducing the need to cut staff and costs in the downtime.

On the flip side, leaving the decision to export until a product reaches saturation or the domestic economy requires you to find new sources of revenue can be dangerous. It means you’ll be forced to spend time and money learning about new markets and setting up to enter them at a time when your own operations are vulnerable.

There’s also evidence that small businesses which export gain a better understanding of global markets, which means they’re likely to be more attuned to developing trends overseas and be more likely to cash in on those trends when they hit Australia – leading to increased competitiveness.

It all sounds easy and exciting.  But in reality selling to customers locally is hard enough, taking the whole process offshore to different cultures can be difficult.  There are plenty of government and private agencies around to help guide your business through the process, but when it comes down to it, not all businesses are built to export.

It’s not just about whether you think you’re ready to enter new markets, it’s about whether you and your business have the capabilities to do it well.  A good place to start finding out if you’ve got what it takes is Austrade, the Government agency set up to help Australian businesses export and expand internationally.  In conjunction with the University of New South Wales, it developed an online tool for testing the extent to which a business realistically has the ability to export. If it is something you’ve been considering take a look on the website www.austrade.gov.au.

It’s also good for businesses interested in exporting down the track, as it points out all the things you’ll need to do to become “export ready”.  And you know what?  Even if you find your business isn’t suited to international markets the process of finding out can still be beneficial.

You’ll need to analyse your ability to manage cash flow with longer creditor and debtor cycles, your ability to market to different customer groups, and your financial position or ability to access funding … a very similar process you’d go through before deciding whether to expand locally.