MSU is pleased to bring you a three-part instructional series of blogs about exporting to international markets. For those businesses looking for new markets, the insight provided by Export Development Canada is simply indispensable, covering everything from labelling to financing to insurance and copyright.
In this first of three installments, you’ll learn how to assess and boost your production goals to meet an order and also how to navigate the in-country visa and tax implications of exporting.
I just got my first international order! Now what?
When you’re running a young business, getting your first few orders is always exciting – even more so when they come from a foreign customer. Oftentimes your first export opportunity will come unexpectedly. You could be exhibiting at a local trade show and an American distributor asks if they can order two truckloads of your organic jams. Or maybe your “Software as a Service” website just came online and a company in Singapore e-mails you asking for a one-month free trial. Suddenly you have an opportunity abroad! That’s amazing!
Ensuring you can successfully deliver on a new order can be stressful enough when your start-up is strapped for time and cash, but it can be even more daunting when you throw a foreign country into the mix. It’s true that exporting is different from selling in Canada, and it comes with its own set of challenges. But you don’t need to panic! There are scores of resources and organizations out there to help you navigate the export journey, and EDC can help you along the way.
Here’s a checklist of things to consider when that surprise export order comes along – and also the resources to help you navigate these issues.
Know your capacity to deliver on the request
- Can I make that many widgets? Canada’s market is relatively small, especially when you think of our neighbours to the south with a market 10 times the size of Canada’s. If you’re getting an export order, chances are it’ll be larger than your typical local order. Before agreeing to ship 100,000 units when your orders are usually 1,000, carefully crunch your numbers to make sure you can actually produce the required quantity with the employees and equipment that you have. EDC can help you beef up your capacity before fulfilling the order, but if it’s a time-sensitive one, you’ll need to work with what you’ve already got.
- Can I deliver on time and at a reasonable cost? Exporting usually involves longer travel times and wait times, as well as higher shipping expenses. Before agreeing to a tight delivery date – and before promising the same price as what you offer your clients down the street – make sure to understand how long it will take and how much it will cost to ship to the customer at the quality they expect. You may even be pressured to deliver faster than you normally would. In a recent interview with clothing retailer Frank + Oak, owner Ethan Song stressed the fact that US customers have higher expectations for fast shipping compared to their Canadian counterparts.
- Can I send my employees abroad to provide installation or after-sales service? Whether you’re selling a service or selling a product that needs after-sales support, you may have to consider visa requirements for the country in which your customer is located . You may also have to look into tax implications for the payment that you receive while providing services abroad. Can you get the paperwork together on time and does your profit margin allow for the increased costs of traveling to your client?
If you see yourself answering “no” to any of those questions, or if you see that your profit margin is getting really tight after factoring in these additional costs, you may want to reconsider saying “yes” to the request. Whether it’s reducing the order size, renegotiating the delivery date, or even turning down the order, you may find yourself in a situation where it’s wiser to step back rather than sell at a loss or exhaust your resources trying to fulfill the order.
Tanita Kouzev is a Senior Associate on EDC’s Advisory Services team. Her job is to connect Canadian companies with experts and resources on trade-related issues like country intelligence, market entry strategies, export/import compliance, and any other topic they might need advice on.