Now that you have assessed your firm's current position and your motivations for exporting you can proceed in further developing your export plan. Just as a regular business plan, you export plan will be your custom-tailored guide to any aspect of your international business venture. Your Export Plan willgauge the country risk, the target market, the demographics, the market demand and needs, the currency and commercial risks, the legal aspects, the logistics of delivering the product or service, and lastly, the financial implications involved in an export transaction.
Export Plan Outline
The following information will outline and explain the main and most vital components of you export plan. Just as in all business documents your export plan will open with a title page, a table of contents and an executive summary.
- Cover Page
- Table of Contents
- Executive Summary (like your business plan, this is written last)
A. Company Description
- In this section, outline your company's major developments, any experience exporting and explain your firm's corporate legal structure, any subsidiaries, affiliates, joint ventures, strategic alliances.
- Goals and Objectives
- This section will explain how your current company goals are compatible with your export venture. List your overall company goals and your export goals and explain how the export activity contributes to the overall success of thecompany.
- As previously mentioned upper management's understanding and commitment to theexport venture.Highlight the company's ownership, its organizational structure, andidentify key personnel and any exporting experience they may possess.
- Export Team
- Outline the preparedness ofyourstaff to ensure their commitment to your export plan. Assign specific individuals to positions they have experience in and explain their international skills and knowledge (language, logistics, international marketing, etc.)
- Company Finances
- Just as with your business plan, this is the most critical section of an export plan. Highlight and outline the financial health of your company. Explain the percentage of sales that the export venture will be accounted for and those sales' relation to the overall growth of your company.
B. Product/Service Description
- Domestic and International Products/Services
- This section will outline your analysis of the export opportunity and your products/services' role in that export market. Topic headings may include: Target Customer Profile, Required Product and Packaging Modifications for the Export Market,and Life Cycle of your Product/Service.
- Growth Potential
- Explain the market's potential return and the costs associated with the research and development of the market. Be sure to cover, domestic and international markets, new products/services research and development and new intellectual property protection.
C. Market Analysis
- Rationale for Exporting
- This section further builds on B1 and highlights the company's motivations for exporting and the compatibility of exporting to the overall firm's success.
- Rationale for Selected Market
- In this section outline why the selected market is your most appropriate foreign destination.
- Country Profile
- This section will provide specific information about your selected country that may affect your ability to do business in and with that country. Be sure to include: political, economic, social conditions, regulatory environment, legal structure, taxation framework, infrastructure conditions (roads, ports, communications, etc.), and cultural and business practices. Much of this information is available through our Government Resources page.
- Industry Profile and Competitive Analysis
- This section will outline the state of your industry in your target country and identify key competitors. Broadly identify key customers or end-users and competitors, while considering best business practices in that region. The competitive analysis section will outline and highlight who the existing competitors are, the competitive advantage each of these firms represents. Finally, identify existing sources of production, channels of distribution, typical marketing practices and common forms of payment.
D. Market Entry StrategyThis section is a critical one for your export plan and must cover your positioning, marketing and promotion of your product/service. Some topic headlines to include or consider:
- Target Customer Profile
- (including direct customers, end-user profiles, and the total market size and potential for growth). In as much detail as possible explain who will be your customer and why and also outline the potential growth of your new international customer base in your selected region/country.
- Foreign Market Product/Service Description
- In this section outline the following: typical usage of by the end-user (what problems does your product/service solve?), competitive advantage and market niche, describe necessary product modifications, product and quality characteristics, any applicable product specifications standards (health and safety), labelling, packaging, language, life cycle of the product in the foreign market, and any applicable foreign intellectual property protection.
- Pricing Strategy
- This section will detail your product's pricing in the foreign market, the price sensitivity of your target market, and explain why you have chosen a particular strategy. Include the following topic headings in this section: Export costing analysis, pricing constraints, legislation and legal aspects (anti-dumping, price controls, etc.), current market pricing, price sensitivity (the market's level of acceptance of a lower or higher price), and an outline of your market penetration pricing strategy (price skimming, penetration pricing, flexible pricing, static pricing, etc.)
- Sales and Promotion Strategies
- This section will detail your chosen sales and promotion strategies. Your sales method will be your chosen form of selling in the selected country; this will be done through one of the following methods: company representative, subsidiary or affiliated company, foreign agent, foreign broker, mail order/Internet orders. Your promotion strategy will cover any marketing efforts your firm undertakes in the selected country; these can be a combination of any of the following: newspapers, magazines, radio, television, Internet, posters, flyers, letters, and any trade show/fair participation. Include any promotional costs and any sales financing support that may be appropriate (EDC, Multi-lateral Development Banks). Finally detail you after-sales service strategy (returns, repairs, warranties, maintenance, and communications), who and how will manage this important aspect of sales.
- Logistics and Transportation
- This section will describe how your product/service will arrive in your target customer's possession, fromyour production plant to the end-user. Outline the expected timelines between order processing and delivery (contract negotiations, production, invoicing, collections, deliveries, communications, etc.). Choose the appropriate shipping terms - Incoterms. Detail your inventory control methodology, packing and marketing requirements, and necessary documentation (import, export, health, quotas, inspections, customs preapprovals). Finally make sure you include your usage of professional services intermediaries (freight forwarders, customs brokers) and the required freight insurance.
E. International LawUnderstanding the legal framework in a certain country is vital to your export venture's success. Seek experienced legal counsel before you proceed any further in your venture, the Canadian Trade Commissioner's Service can provide you with detailed lists of sector/country specific lawyers who can work on your behalf. Consider the following key issues when considering the legal aspect of exporting.
- Dispute resolution in sales contracts (mediation/arbitration clauses, law of contract, venue, atonement, and securing payment).
- Language consideration (which will be the preferred language used to bind the parties into a contract).
- Contract terms and conditions (Incoterms, currency of payment, method of payment, insurance)
- Quality Standards (expected quality of product/service to be detailed in the contract).
- Product liability considerations.
- Intellectual property.
- Sales Agent/Distributor contract (commissions, territory, duties, authority, termination).
F. Financial AnalysisThis section will outline the financial viability of your export venture. We urge you to see advice for this section just as the previous one, the advice of an accountant experienced in the country, market and/or industry gives you an immense insight to your market. This section will at least include the following sub-sections:
- Facility and Equipment Requirements (any capital expenditure items specific to your export venture)
- Sales Forecast (number of units exporting, price/unit, total sales over 3 - 5 years, monthly details for month one).
- Cost of Goods Sold (number of units exporting, cost/unit, and total cost of goods sold).
- Projected International Income Statement (international sales less cost of goods sold and international overhead expenses to obtain projected net profit).
- Projected International Cash Flow: expected expenditures of cash and receipt of cash, consider the time elements from the Logistics and Transportation portion of the exportplan.
- Breakdown Analysis (number of units and dollar sales to cover cost of goods and international overhead).
- Financing Requirements (identify term financing and working capital requirements, equity contribution and collateral available to secure needed financing.)
G. Risk ManagementDoing business domestically carries a certain amount of risks to any business, and your firm may be well prepared and experienced to handle all of the issues that arise when conducting and developing your business. When exporting, these risks are further magnified and there are new factors and risks to consider. Quantify all of the foreseeable risks in this section, these should include: country risk (assessment of the political, regulatory, and economic conditions and include solutions to these), commercial risk (assessment of creditworthiness, contingencies for non-performance such as default, refusal to accept goods), currency risk (contingencies for maintance of value), internal risk (contingencies for ensuring adequate manpower skills and availability control over production and distribution costs), and finally, market risk (contingencies for changes in domestic and foreign market conditions).
H. ConclusionA well prepared, researched and documented export plan can make or break any export venture. Just as when writing regular business plans, the more attention to detail you provide the more likely you will be in securing outside funding, and eventually the more successful the entire export venture will be for you and your company.