Growing a sustainable export business requires vision, knowledge, planning – and funds. Here are some benefits and risks of expanding a business.
How to take your business international
It’s important to understand both the benefits and risks of expanding a business internationally. For example, in some countries, the lead-time between initial contact in an export market and a sales agreement can be years.
Are you ready to cope with the changes and adjust your business accordingly? Here are five questions to ask when expanding your business overseas.
1. Do you have enough capability?
Whether you manufacture widgets, publish books, teach foreign languages or sell products, exporting overseas could require you to scale up in order to satisfy demand.
For example, your business expansion could involve selling to larger organisations or to a growing population in an under-supplied market. When you’re developing your business growth strategies you’ll need to ask yourself hard questions such as these.
- Will your business be able to increase its capability to satisfy export demand? A key thing to consider here is growth without compromising your existing commitments domestically.
- Will you be able to sustain growth if orders begin pouring in? For example, if you started exporting muesli bars to China and you underestimated how popular your product would be, how would your business respond to this challenge?
- At what point will you need to outsource or contract certain jobs or tasks? Putting your current staff under too much pressure might disrupt your core business processes, inadvertently slowing down your business’s growth.
2. Have you taken culture into account?
If you run a service-based business you might need to invest heavily in training and staffing. Not only will your staff need to be skilled in delivering the service, they’ll need an understanding of the cultural differences between your target export market and Australia.
For example, it could be a good idea to invest in a native-speaking support team on the ground in your target market(s). Have a read of Austrade’s , opens in new windowarticle about getting ready for exporting, opens in new window.
3. Do you have access to sufficient capital?
Expect to encounter a variety of costs as you explore overseas markets as well as when you actively enter them. While planning your launch, get your financial resources in order – including any capital funding you’ll need to sustain your expected growth.
You’ll probably need to invest in more production assets and raw materials stock if you’re exporting goods. You may also need additional staff and warehouse space. It’s smart to have plans and vendor relationships in place so that, once demand increases, you can quickly ramp up production. For example, if you’re exporting and demand is increasing sharply, will you be able to contract out to local suppliers in the export country? There may be issues of quality control and logistics and you might come to the conclusion that keeping production in Australia is best for quality purposes.
If you need to increase your capabilities, NAB’s equipment finance loans, leases and hire purchases might suit you.
4. Have you considered all additional costs?
You’ll need funds to cover the costs of travel, extra staff, international marketing, packaging, compliance and modifications to your goods or services to meet the expectations of your new market. Potential funding sources include existing business capital, personal funds, small business loans, export grants and financial assistance from your state – or the Australian Government.
See Austrade’s information about financing your export business, opens in new window and available export grants, opens in new window.
5. Will you need to hire more staff?
Depending on your selected distribution channels, you may need staff on the ground in your export market. For example, if you’re exporting software to Japan, you may want to hire a sales team to approach business clients. Likewise, it might be wise to have a local marketing team to handle public relations, advertising, and communications in your target market. This is particularly important if there are language and cultural differences.
You’ll likely need extra staff at home to increase the potential capacity of your business. This is especially true if you manufacture your own goods. You may even need to change some staff – or let some go so you can hire more qualified people. Will your Australian office field phone calls from your overseas customers? If so, you’ll need to hire customer service agents who speak the local language to handle incoming enquiries.
In any of these cases, hiring additional staff will also require investing in them. They’ll have to be trained and equipped with the tools they’ll need to succeed on the job.
Building an export business is going to bring a great deal of change to your company, and it will require funds in order to grow in a sustainable way. It's important to feel confident that your business will be able to meet the demands of overseas customers by scaling up quickly if need be. Next steps to consider:
If going international matters to you, we're here to make it happen.
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The information contained in this article is correct as of July 2018 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.