SMEs that have made it
locally and are ready to attain the next level of growth by venturing into the
export market should avoid making costly mistakes that could potentially harm
their businesses.
Bobby Madhav, Head of
Trade and Collateralised Trade Finance at FNB Business says, businesses
entering the export market for the first time often mistakenly assume that
merely doing research and having a good concept and value proposition are
enough to guarantee success.
“In spite of these
important factors, without the relevant experience, guidance and partnerships,
small businesses are bound to fall victim to costly export errors,” says Madhav
as he shares ten common export mistakes that businesses should aim to avoid.
• Not willing to learn from others – SMEs
that consult experienced exporters, within their sectors, learn a great deal
from their past failures and successes. This form of advice is usually free and
can save a business time and money.
• Abandoning core market – neglecting
the core market can result in the business losing customers and market share. This
can lead to complete failure, should the export business not do well.
• Replicating products – because each market is
unique, it is essential that products and services are tailored accordingly. Merely
replicating a model does not guarantee success.
• Not forming the right partnerships – it is
not practical to try and understand all the local market dynamics through
acquired research. SMEs should aim to form the right partnerships with suppliers
and stakeholders on the ground to improve their chances of success.
• Long-term commitment – venturing
into an export market should be approached as long-term commitment for the
business. Expecting success too soon will often result in disappointment.
• Underestimating competition – SMEs
should never underestimate competitors regardless of how good their offerings
may be. Competitors do not want to lose market share and can quickly adjust
their products and services, since they understand the market better.
• Over extending the business – resources
and energy should be invested in one market at a time. Once successful and the
business is operating smoothly, only then can expansion to other markets be
considered.
• Trade finance mistakes - collaborating
with a bank or financial services provider that can offer SME exporters unique
solutions to overcome financial constraints is essential. SMEs should consider
financing and risk hedging solutions that cater for all their exporting needs.
• Poor risk management – it is almost
impossible to prepare for the scale of business risks presented by foreign
markets without a comprehensive risk management plan in place, which takes into
account factors such as politics, regulation, crime, cultural and market risks
etc.
• Not having a plan C – one of the questions
that business owners should ask themselves when putting together their export
plans is – what happens if my plan A and B fail? A thorough export plan should
be forward looking and contain the lowest level of detail.
“The biggest mistake that small businesses entering the export market can make is to be conservative and overconfident. It is often what you don’t know that can hurt your business the most,” concludes Madhav.
Article first appeared in Export &
Import SA 
