Exporting is more important to the economies on the island of Ireland than is the case for almost any other country in the world – in fact, much more important to the island than it is for large economies such as the USA, Germany or China. Consequently, thousands of our companies have developed formidable skills as exporters and are already doing business successfully in all corners of the world. See some examples at Enterprise Ireland and Invest Northern Ireland.This guide presents the benefits of exporting, along with practical advice of the issues to consider when planning your export strategy. The ‘How to export’ section of this guide includes advice on many aspects of exporting, from businesses that have know what it takes to win in global markets. If you are not exporting already, then why not join the club of successful exporters?
What are the benefits of exporting?
Exporting is one way of increasing your sales. The time may come when you have maximised the sales potential of your domestic market and will need to consider exporting to generate more revenue from an existing product or service. Alternatively, an export opportunity may arise due to international market factors which could generate a demand for your product that did not previously exist.
Selling in an overseas market can help your business grow at a faster rate than if you were confined to your domestic market.
Exports can contribute to increased profits, although this depends on the export market and the unique attributes of each market. Some products – especially those that are unique or very innovative in nature – may command greater profit margins abroad than in your local market. However, it is also not uncommon that you may receive smaller profit margins from your export sales compared with the local market, due to the highly competitive nature of global markets that force exporters to lower prices and squeeze profits.
Reducing risk and balancing growth
Another key benefit of exporting is that it allows you to spread risk. By selling in other countries, you are less vulnerable to changes in the domestic economy and less dependent on the buying decisions or demand patterns of a small number of local customers. At any one time, different markets will experience different growth rates. Selling in multiple countries may minimise the risk of low growth in one or more of these countries and result in a balanced portfolio of overall growth.
Economies of scale
Exporting is an excellent way to drive production to a level that delivers economies of scale, particularly if your product or service is standard across export markets with little or no need for adaptation. Achieving greater economies of scale will allow your business to become more cost-competitive.
Extending the product/service lifecycle
As a product or service reaches the mature or declining stages of its lifecycle in the domestic market, there may be an export opportunity that provides a new lease of life elsewhere in the world. By targeting a market where this product or service could be introduced, you are essentially extending its lifecycle – generating turnover and profit which would have otherwise declined.
By exposing businesses to new markets, competitors, processes and technology, exporting can spark ideas for new products, services and processes. Very often, this would not be attained with a narrow focus on the domestic market. Exposure to new customers abroad enhances the skill set of all parts of your organisation, from learning about how business is conducted, to how logistics function and how different cultures assess your company and its products or services.
Trading in the global marketplace increases your exposure to international best practice, ideas and alternative ways of doing business – improving your chances of competing at home and overseas. By entering new markets, you will gain insight into the trends that are driving developments in your sector, such as new ideas for products or services. It will give you contacts with the key players, decision-makers and influencers; and it will give you insights into how selling, marketing and communications are developing in key markets.
Through selling for the first time in an export market, you will earn greater credibility when looking to open other accounts in that country and in developing business in other nearby markets. Having a reference customer is a key stepping stone to building more business in that market. It might seem counter-intuitive, but winning a prestigious contract overseas can in many cases make doing business in your domestic market easier.