Posts Tagged ‘export sales’

If you’re a small business owner you may have considered looking into exporting your goods and services overseas. Exporting is a billion dollar business – when it is done properly. As a small business you will have to rely on the help of a professional exporter to help you get your business up and running. Setting this up is a daunting prospect to say the least, but it can be done and you can turn a nice profit from an exporting business.

The biggest problem with turning your company into an exporter is understanding where to start. It is a very detailed business that requires patience and a lot of hard work to get off the ground. When you have a successful exporting business in place, you could earn a profit of 10% for every transaction that you make. While the process is considerably more complicated and detailed than what we present here, this quick guide will give you an idea of what you need to do to get started.

• In order to be successful in exporting you need to make contacts with manufacturers and distributors overseas that want to trade with you. The best way to do this is to make a list of everyone you know outside of your home country and asking them to aid you in finding partner companies. If you do not know anyone overseas, contact the foreign embassy of the country you want to export to and ask to speak with whoever is in charge of their global trade initiative.

• Once you have made your initial contact start researching the country you want to export to. You need to identify the market niche you are interested in exporting to and research the popular trends that are sweeping the country. This will give you a good look at the viability of the market you are interested in. Make sure you also research aspects of exporting that include any restrictions that are in place, tariffs that may need to be paid and any trade barriers you will have to overcome.

• After you have prepared all of your research and targeted the market you want to import to you can start contacting the list of people you made who could be interested in working with you to build your exporting business. Take your time talking to these people and get to know them well so that you are confident they are the right fit for your business and will make a viable selling partner. At this point you can put into place deals that are agreeable to both of you that include prices charged, the amount of goods to be delivered, distribution to the customers, letters of credits and shipping agreements.

• With an agreement in hand you will need to find a competent exporter to partner with in order to get your goods delivered to your overseas partner overseeing the selling and distribution of your exporting division. Research is key here and most exporters will be able to explain the intricacies of the business to you in order to develop a good working relationship that ensures your products are delivered on time.

Licensing is a method of leveraging an organization’s process, trademark, patent, or other intellectual property for a fee or royalty. The licensed property can then be associated with a product or used in conjunction with a service or other effort produced by the licensee. The arrangement benefits both parties. The licensee gains a familiar association with a product or a tested method of doing things, and the licensor gains additional revenue and, in the case of trademarks or brand names, exposure for the trademark or brand being licensed. In the latter case, for example, a company that does not have a recognizable brand can obtain a license from a known brand to enter into a market that would otherwise be too expensive to cater to. In this way, the licensee capitalizes on an image that is already known and respected.

Companies grant licenses for several reasons. Though licensing does generate income for the licensor, licensing is often not an end in itself. Rather, licensing allows the owner of a property to gain entrance into new markets that would otherwise remain untapped due to lack of marketing expertise or ways to distribute their existing products in a new market. In some cases, licensing can also expand a company’s customer base by offering goods to those who cannot afford its main line products.

The growing trend toward globalization of businesses is a significant factor in the licensing arena as well. About one third of the revenue from licensed products that originate in the U.S. comes from international territories. In addition, international licensors are increasingly entering the U.S. market, a situation that was extremely rare a decade ago. Licensing properties overseas has significant advantages to companies that want to introduce products to international markets without investing in expansion or exporting activities. Of course, before licensing in other countries, several factors must be considered. A licensing campaign that is effective in one country may not work as well in another for a variety of reasons. Differences in laws with respect to intellectual property, taxes, antitrust issues and customs may have a significant effect on overseas licensing contracts. Knowledge of the economy in the foreign market is essential when planning an international licensing effort, as are language and cultural issues.

When a licensed brand or trademark is already known, licensees often have little additional marketing to do because they are able to capitalize on attracting an existing customer base. However, in some cases, licensees are required to contribute to marketing efforts, often by investing a percentage of sales for marketing efforts. Such an agreement can benefit both sides. Since both the licensor and licensee have in interest in sales of the product, the best marketing strategy is often the result of the combined efforts of both. This is especially true when art and design are central to the development of the licensed product.

Companies entering into a licensing agreement to increase brand awareness and recognition in new markets must select licensees carefully. This is important to ensure that pitfalls that could damage the licensor’s reputation are avoided. One of the more common mistakes licensors make in this regard is inadequate monitoring of the product. If a licensed product is of inferior quality or is sold in discount stores, for example, the reputation of the brand can be jeopardized. To ensure consistency in quality, licensors develop a style guide that must be used by licensees in designing the final product. Licensors will want to examine the quality of the licensee’s product to ensure that the guidelines are set forth in the style guide are followed. In addition, the licensee’s capacity to produce the volume of sales necessary to maintain the relationship is an important consideration. The licensee’s experience, breadth and depth of distribution channels, the size of its sales force, and its total marketing capabilities are all issues here. The licensee’s willingness to guarantee a certain amount in royalty payments is another prime consideration for licensors.

Before a property can be licensed, it must be cleared and protected legally by the owner. The way a property is protected depends on the kind of property it is. Trademarks, copyrights and patents are examples of how a property can be legally protected for licensing. Trademarks are applied to words and phrases, brand names, characters, symbols and designs that identify a company’s goods and distinguish it from another. Trademarks are registered with the Patent and Trademark Office (PTO) of the United States Department of Commerce. In contrast to trademarks, copyrights exist automatically with the creation of original material and are owned by the author of the material. Graphics, music and written work are automatically copyrighted material. The symbol © indicates a copyright, but the use of the symbol is optional since the copyright always rests with the author automatically unless the work is considered “work for hire.” Patents can be filed for designs, technologies and other inventions that provide a unique way of accomplishing something. Regardless of its reputation, a licensable patent can provide revenue from companies that can use the patented method or design to improve their own products or services.

In terms of finances, most licensing agreements involve royalty payments to the licensor by the licensee. Typically, an amount of sales of the licensed product, a minimum guarantee and an advance are included in the contract. Graduated royalties and royalties that are tied to performance benchmarks may also be negotiated. Royalties are typically between 5 and 14% but can range from 1-20%. The rate depends, of course, on the popularity and demand of the property to be licensed. In competitive sectors, where there are many similar properties available for licensing, royalty rates are lower than for unique properties with well-established markets. Royalty rates are typically applied to the manufacturer’s selling price, not the retail price.

The guarantee included in most royalty agreements is a minimum amount that the licensee must pay the licensor even if sales are not great enough to generate that amount in straight royalties. Including a guarantee minimizes the risk to the licensor and also encourages the licensee to be proactive in generating sales. Often the guarantee or a percentage of it is required in an advance upfront. In certain cases, the advance may be waived or lowered, for example, when the licensor wants the licensee to initially invest funds in marketing or developing the product.

The business of licensing can pose many challenges. For many licensors, retaining a licensing agent is the most cost effective and efficient way to manage licensing ventures. Especially for those new to licensing, agents offer expertise and contacts that can prove invaluable to the licensor. This may be particularly important when licensing is done internationally. Agents handle the business of licensing, from selecting licensees and contract negotiations to creating stylebooks and collecting fees. Most agents work by charging a percentage of royalty income, while others are hired on retainers and collect fees upfront. Commissions paid to agents can range from as low as 15% to as much as 55%, but generally fall in the 35 to 40% range. Retainers may range from $3,000 to $20,000 for a basic agreement, with fees for consulting or additional duties added to that amount.

While agents assist licensors with business matters, manufacturers often turn to licensing consultants to guide them through the process of obtaining the license to a property. Consultants can represent manufacturers who do not have in-house staff with experience in licensing. Consultants advise manufacturers in evaluating whether a property is appropriate for the manufacturer, and they can help develop licensing strategies as well. Though terms vary widely, most consultants, like agents, either work on commission or charge a retainer.

If you have the right product or service, you might want to consider exporting, or in fact make a serious attempt to export. Exporting can be both a challenging task and a rewarding opportunity. If carried out with foresightedness, exporting can really be an activity worth following that’d deliberately yield you increased profits, and greater market share.

8-Impactive Ways of Exporting to Success

Here are the ways that can help you achieve success in exporting:

• Define your goals and objectives, and focus on them. Make a deliberate commitment that would otherwise give you confidence to compete internationally, and transcend national borders. Keep in mind that exporting is an activity that takes time and energy, and if you have no long term and short term goals, you are bound to fail. Ideally speaking, your long term goals would be the ones which you wish to achieve a year from now, or most probably in future. On the other hand, your short term goals would be the ones which you wish to fulfill in 5 to 10 days or within the period of one month. You as an exporter need to carefully identify your priorities.

• Do a SWOT Analysis. The acronym SWOT expands to Strengths, Weakness, Opportunities and Threats, which are helpful in determining the strong and the weak points in your export strategy. Moreover, as a successful exporter, doing meticulous SWOT analysis is also instrumental when indicating the future opportunities or threats perceptible in the markets chosen, and what strategy should be formulated in dicey market conditions.

• Develop an Export Plan. A well researched and a detailed export plan is the secret to exporting success. A structured export plan would be your guiding light, when you make the move towards exploring foreign markets. An export plan would ideally help you to act effectively, rather than reacting to the international market challenges and risks. A well structured export plan would comprise: Company’s Description, the target market and its industry; analysis of the target market and its industry; Individual Business Objectives of your company; financial requirements and forecasts; SWOT Analysis of the competitive market and in contrast to your own etc. A workable export strategy planned by you would also help you in aligning support from financial institutions, freight forwarders, consultants, and various other strategic partners. Furthermore, in order to achieve success as a legitimate exporter, you need to think along the lines of customer profiling, sales and distribution channels; financial requirements and forecasts; and many other potential factors.

• Conduct Market Research. This would help you in taking a firm stand while you make an export marketing decision based entirely on the socio-economic, political and cultural factors. Moreover, market research saves you time, money and energy. It provides you with a holistic view about the export market you want to penetrate. There are two types of market research, such as, Secondary market research and Primary market research. Secondary market research would help you collect information from various published resources such as books, newspapers, market reports, studies, periodicals; and the Internet. Secondary market research is a cost effective and readily available means to refine your export information requirements. Primary market research on the other hand aims to make a direct link with the industry experts, customers, and other potential sources of information. Primary market research involves one-to-one interviews and consultations. An exporter should make an attempt to reach primary market, after he has become familiar with the potential markets.

• How to enter the foreign market? Now that you have done plenty of market research and developed a workable marketing strategy, it is important to see how and what market strategies would work potentially well for your target market. There are basically three go-to-market strategies. These include Direct Exporting, Indirect Exporting and Exporting through strategic partnerships. Under the direct exporting method, there’s direct marketing and selling to the client. In the Indirect exporting method, an agreement is done with an agent, distributor or a trading house for the purpose of selling the products in the target market. The third go-to-market strategy, it may be feasible to forge strategic partnerships with other companies or individuals that would harmonize your export business.

• How to get your product or service exported to the foreign market? Exporting is a dynamic activity, and every market where you intend to export, have different market regulations, which cover health, safety, security, customs and duties, packaging and labeling. It is also important that you establish an affable relationship with the freight forwarding company and a customs broker. This would help overcome the hurdles in compliance and shipping documentation.

• How to arrange the finances in exporting? Business returns are only evident if you invest your time and money. Moreover, it is also important to see that you have financial stability and secure cash flow. Therefore, as a professional exporter you should develop your financial plan so as to address the imminent cost requirements involved in exporting. The plan should also address to the immediate as well as long term budgetary needs.

• Search financing options for your Exporting Success. A good exporter is the one who materializes a workable financial plan so as to take care of the hidden costs involved in exporting. The plan would include at least a two- to three-year cash budget that would cover overhead expenses, as well as the capital budget. A capital budget is the one that helps the exporter to rightly assess the cost-benefits of the export objectives, and is also considered as an effective operating plan to make precise assessment of the expenditures involved therein.

Exporting is as professional as any other business activity. Therefore, you need to plan out things well in advance. With export professionals working round the clock at Khanstellation Group, Inc. you have the right export team and strategy working in place. Our exporting solutions also help the exporter save you money, and increase returns on investment.