Writing a strategic export plan is key to successful exporting. A clear strategy must be created before considering exporting products, as well as a detailed plan that identifies the market and communicates why the company should consider exporting. Prior to implementing an export strategy for a business, a business should assess its “export readiness.” It is only beneficial to do further international trade planning if the company’s resources are sufficient for export.
Export plan, the definition
It’s a valuable tool which having it for exporting provides businessmen with a way to understand where they stand in regards to their foreign markets. In this regard, it enables the identification of potential risks that may occur and the establishment of specific contingency plans to mitigate them. You can also use it to prepare an export strategy or conduct market research to learn more about the final markets. You can also utilize it to improve relations with clients, suppliers, sales agents, or financial institutions. There is no predetermined structure for export plan. Each small and medium-sized enterprise (SME) has a different export plan because it depends on the products, services, and features it offers.
The purpose of an export plan is to gather facts, constraints, and goals and formulate a statement of action that incorporates these factors. Additionally, milestones are set to assess how well the plan is working and motivate employees.
What are the values of an export plan?
Export plans are valuable and beneficial for the business for these reasons:
- Written plans help assure an extended commitment to exporting and provide a clear understanding of the specific steps to be taken.
- In case of lacking a business plan, you might miss better opportunities. Reactive exporters may succumb to abandoning international sales prematurely, concluding too soon that it is not worth the effort or that it is easier to serve customers closer to home, even if that customer base may not grow, or could even shrink over time.
- Even though 60 percent of all exporters sell only to one market, a growing proportion of small exporters sell to many countries beyond what they have employees, which is a significant factor in their overall sales. Increasingly, mini-multinational companies are emerging, and, in the case of writing and having an export plan, your company can be one of them.
What Items are included in an export plan?
- Your business should be described.
Information about the company needs to be clearly described. Specifically, a description of its capabilities, expertise, and chances of success in implementing the project. These details must include all the strengths and weaknesses. Moreover, the business plan must consist of long- and short-term objectives, as well as a description of the product or service and any former export business plans.
- The analysis of the target market
Detailed information regarding the export destination and the features of that market should be included in all export plans. Politics, laws, economies, social and cultural factors all play a role. An understanding of the industry in the export market is essential, as is an analysis of market segmentation, competition, trade barriers, and the extent of the tariffs.
- Human resources
“Export planning” involves “incorporating all the information related to export projects, including all the human resources available at the company,” as well as that related to international trade experience and skills and the structure of the company and its international department. Besides offering details about the firm’s international advisors and alliances, it’s also imperative to state whether it has any.
- Phase of operation
This part is considered as the core of the export plan, which describes the company’s strategy for market penetration in order to meet its long-term financial objectives. This outline must include all aspects of the local, national, and international aspects of the operation, including administrative, technical, financial, and commercial elements. It also must include all aspects related to production and the international aspect. Factors such as International and production aspects must be consedered.
- An analysis of all risks
This aspect deals with “identifying possible problems that may negatively impact the project.” We must also specify contingency plans against such potential problems.
- A financial projection
An entrepreneur should record financial information on: the available resources to complete an export program, historical financial information, cash flow, financial statements, and critical financial information on liquidity, profitability, and activity.
- A summary
For the last step, to provide a concise overview of the current situation and future, a summary of the export plan should be illustrated. The business plan should describe the firm accurately, explain what it offers, describe competitive advantages, as well as explain the financial requirements.