Possessing the right information upfront gives you the ability to peer into the future and more accurately predict possible outcomes for your latest ventures abroad. Acquiring the right information is simple and straightforward – if you know where to look.
Having trudged through years of bureaucracy and regulations, a lot of small business owners have adopted the mindset that government is more of a hindrance than a help. But when it comes to exporting, you need to get that idea out of your head. The government is very interested in helping small businesses sell their goods and services abroad, and they have established several resources to help you research the potential of international markets for your products.
For information about links and resources for foreign market analysis, visit the government website at www.export.gov. There, you will find country-specific data that you will need throughout the process. Generally, however, the process itself should look something like this:
Step 1: Find Potential Export Markets
A good market search begins by looking at trade statistics to determine the countries and geographic areas that are most likely to import the products you sell. The key is to find a handful (5-10) of the fastest growing markets, taking into account their historical performance over the past several years.
Along the way, you should factor in other market research information such as tariffs, market openness, distribution infrastructure and similar variables that directly affect profitability. You should also keep an eye out for smaller, emerging markets where you may encounter fewer competitors.
Your goal is to narrow your search to 3-5 markets that hold the most promise for success. You probably won’t export to all of them, but at least you will have a solid group of prospects to choose from.
Step 2: Assess Targeted Export Markets
After you have identified some promising foreign markets, the next step is to conduct a thorough investigation of their competitive, demographic, and economic trends. Before you commit to a market, you’ll want to know who you’ll be competing against as well as any quirky cultural trends that would put your product at a disadvantage.
Learn as much as you can about foreign trade barriers including tariffs and fees. On the flip side, you should also look into existing U.S. trade incentives designed to make it easier for you to export to your target countries. With the information you learn, determine the level at which you’ll need to price your product to remain profitable and decide whether or not your price is still competitive.
Step 3: Test Export Demand
The critical test in analyzing a foreign market occurs by testing the demand for your product overseas. You don’t need to begin shipping products abroad to do this. There are several resources at your disposal to connect you with foreign partners who will work with you to assess the viability of your product in their market.