Exporting successfully: A ten-point checklist
Exporting is an opportunity and a challenge for Swiss SMEs. The following checklist will help you capture new markets. Step by step, you will find out what you need to consider when planning your exports and how to avoid mistakes.
1. Set your export objectives
First of all, you need to set your export objectives. The following questions may be helpful: Why do you want your SME to export? Do you have the financial and human resources? How much are you willing and able to invest? Becoming an exporter is only recommended if the core company is in good financial health, as exporting costs time and money.
2. Find a suitable country to export to
Once you have set your objectives the next thing is to find a suitable destination country for your exports. This involves gathering basic information about potential countries to export to. The financial, political and legal situation in these countries is particularly important. The State Secretariat for Economic Affairs (SECO) provides an overview of the economic situation and bilateral relationships of Switzerland's key trading partners in free country profiles. Once you have chosen a country, it is worth making a trip there to see whether it lives up to your expectations. Find out how the sector in the destination country has grown over the past five years and what trends can be expected for the next five years.
3. Analyze the competition
One mistake often made by SMEs exporting for the first time is underestimating their competitors. An analysis of the competition is therefore essential in order to assess the product's potential in the new market. What national and international companies have a local presence? Is there room for another player? How can you stand out from your rivals? When doing your analysis, take into consideration not only your competitor's products but also their services. After all, it can become challenging to ensure the necessary after-sales service in a market that is relatively far away.
4. Draw up an export business plan
Prepare a business plan for trading abroad. What is your strategy for capturing the new market? What are the opportunities and risks? What resources are available, and what revenues can be expected? "I advise creating a business plan with clear milestones and really setting only realistic goals," says Stefan Gerig, Head of Export Finance at Credit Suisse. Information, templates, and samples are available on the Swiss federal government's SME portal.
5. Obtain financing for your exports
It may be a while before you see the first revenues from your exports. That's why it's important to ensure you have the financing needed to cover this period. Credit Suisse supports SMEs with customized loans and financial products. This enables SMEs to bridge the period until they receive payment for the products exported.
6. Find a suitable partner
Exporting can't be done single-handedly. It's important to have local partners who can help SMEs network, market products, or set up a branch. Start searching for potential trading partners in good time. Switzerland Global Enterprise (S-GE) will help you do just that. S-GE has an excellent network of contacts in many markets and brings potential partners together. Please bear in mind, however, that business relationships are maintained differently from one country to the next. For example, it is common practice in Eastern Europe, China, Brazil, and the Gulf states to meet possible partners for a round of golf or a meal. Swiss entrepreneurs are generally not used to that.
7. Check the customs regulations for foreign trade
Whenever you market your products abroad, customs regulations will also play a decisive role. Customs duties, value added tax, and other charges can considerably reduce the profit from the sale of products. Find out whether your products are covered by a free trade agreement, and which documents you need for exporting. Being able to describe their products as "Swiss made" is often crucial for SMEs. In 2017, the "Swissness" regulations were made stricter.
8. Find out more about the rules before you start exporting
In addition to customs regulations, many countries have additional rules on products, sales, and taxes. Indeed these trade barriers have recently been raised even higher. SMEs should not be deterred by this, but they do need to be well-informed.
"The language barriers are not to be underestimated. In Russia or China, for example, extremely few people speak reasonably good English."
Stefan Gerig, Head of Export Finance at Credit Suisse
9. Protect yourself against export risks
Exporting always carries some risk, no matter how well thought-out the export strategy. These could be political, economic, logistical, or administrative risks. Hedging can be a good way to protect the company from these risks. SMEs can protect themselves, for instance, with the federal government's Swiss Export Risk Insurance (SERV). Those who maintain business relationships with foreign business partners are exposed to the risk of fluctuating exchange rates. Credit Suisse has trading teams and specialists based in every region of Switzerland. They will be happy to answer any questions you have about foreign exchange products.
10. Allow plenty of time for exports
Exporting isn't something that happens overnight. You need to allow plenty of time to establish your business and product in a particular country. You should also review your business plan at regular intervals. Is business developing as planned, and is your timetable still on track? If business has developed in a completely different way than expected, think about halting your export plans before you lose a lot of capital. Or, as Stefan Gerig puts it: "Don't throw good money after bad."