A large number of small businesses in New Zealand open their doors to new customers and new sources of revenue every year through exporting. However, if you want to be successful in the export market you need to invest time and money in research, preparation and developing a long-term plan that makes sure your exporting efforts pay off.
To export is to sell your products, services or knowledge overseas. Exporting can help your business grow and prosper, but it can also improve your competitiveness by exposing you and your staff to new ideas and demands from overseas customers.
Successful exporting requires the resources and commitment to deliver your products and services internationally at a competitive price.
The question is: are you ready to do that?
Develop a business plan that will help you identify where you are, where you’re going and how to get there. As you draft it, think about whether you can answer “yes” to the following questions.
Developing a market can be costly in terms of time, money and resources. It requires regular visits to the market to develop relationships. Your entire business needs to be committed to this from the ground up.
It is important to know your product or service and its marketing advantages. Can it be tailored to suit a new market? You should know.
You need to be confident that your product or service is sufficiently proven and developed. If you’re manufacturing in New Zealand, do you have the production capacity to meet market demands? If you are looking to manufacture offshore you need to factor in hidden costs such as greater management overheads, inflexible manufacturing schedules, quality management and cost issues.
Marketing success can be mercurial in domestic markets, let alone foreign ones containing cultural and language differences. It is vital you have a strong understanding of your overseas target markets and the influences that drive purchasing habits in them. If you don’t know who your target customers are and what motivates their purchases, and who your biggest competitors will be, find out – then go back to the drawing board.
You need to have done the research and have solid figures in hand to validate both the potential and the investment. If not, book more flights, get your feet on the ground and talk to more people with knowledge of the market.
Exporting requires considerable management time. To be successful you will need to at least consider hiring managers familiar with the export market.
Does your company have the financial strength to commit the money and the time it may take to develop the market with no guarantee of a return on this investment? Breaking into an offshore market requires considerable funds for, among other things:
You also need to watch out for hidden costs relating to language and cultural issues, and the time you need to spend building relationships and intellectual property protection.
Exporting a service rather than a product can entail its own unique challenges such as intellectual property (IP) protection, business structure and employment.
Protecting against foreign competitors copying your idea is important no matter what you’re exporting, but when your export is a service, a process or a unique way of working – rather than a physical item – you have to be particularly vigilant.
Although seeking patents in different markets can be a sizeable time and money investment, it’s worth doing so because the process will include searches for existing patents your design may infringe upon.
What is Intellectual property has more about this.
Filing international patent applications (external link) on the IPONZ website has more information.
Consider your business and research your target market to identify risks. Careful planning will help your business prepare to take on the challenges involved in exporting services.
You can sell services internationally in a variety of ways. First you need to decide if your business will provide the services directly in your target market, or whether you will form a subsidiary company overseas.
An overseas subsidiary will be subject to overseas company laws, relating to the filing of annual returns and financial statements, for example. This will also affect the tax you need to pay in New Zealand and in your target market.
Choosing the right business structure has information on common structures for your business.
Understanding your international compliance requirements (external link) - New Zealand Trade and Enterprise
Next you need to hire people to provide the services. If you are operating a New Zealand registered company you will need to comply with New Zealand employment law obligations. These include paying holiday leave and ACC levies for the employee, and acting in good faith towards the employee. You will also be responsible for deducting income tax from your employee’s earnings.
You should always seek specific tax advice from a trusted advisor, such as a lawyer or accountant with specialist exporting knowledge of your target market, before considering your options.
Importing and exporting laws has more about if you’re planning to become an importer or exporter.