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What should an export plan contain?

There are several reasons prompting a firm to sell its products in the international market. It is not difficult, but as most things in business, it requires adequate preparation and training. Although creating an export business plan does not in itself guarantee success, it minimizes risks and optimizes operational efficency.

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What is an export plan?

An export business plan is a useful tool that allows businessmen to know where they stand in regard to external markets. It serves as a tool for previously analyzing the risks that may be encountered and for establishing a specific contingency plan in this regard. It is also useful for learning more about the final markets and for preparing an export strategy, or for improving relations with suppliers, sales agents or financial entities.

An export plan has no predetermined structure since it varies depending on the particular products, services and features of each SME (small and medium-sized enterprise). A report by the International Export Business Plan of ProMéxico affirms that, “an export business plan seeks to systematically penetrate a product or service in the international market to maximize efficiency and profitability.” 

In other words, the continuity of exports at lower costs and higher earnings to optimize the business. The export business plan is just an organized way of recording the exports sought, where to, how, and the resources that are available.

Succesful export plans should include the following:

Description of the business

It is essential to include detailed information on the firm. In particular, a description of its capacity, experience and abilities to implement the project. Con Tu Negocio also advises defining the strengths and weaknesses of the firm. It is also necessary to include long and short-term objectives, any former export business plan, the final market insertion strategy, and the description of the product or service.

This last point should also include tariff classifications, consumer and market descriptions, main competitive products, technologies, quality standards, product adjustments, costs, prices, and research and development of new products.

Market Analysis

All export plans must include desired exporting destination and the main features of that market. This entails political, legal, economic, social and cultural aspects. According to ProMéxico it is important to include “a description of the industry in the export market, analysis of the competition, market segmentation, and tariff barriers.”

Human Resources

In PromPerú's publication “Preparing an Export Plan”, Paredes Bullón considers worthy to “include the human capital available at the firm for the export project” in addition to all information related with international trade experience and skills and the organization structure of the firm and of its international department. Furthermore, it is important to specify whether the firm has any external international trade advisors or strategic alliances.

Operational Phase

According to ProMéxico this is the core of the export plan. This section defines the market penetration strategy towards the target market, compatible with the fimr's long-term objectives. It should state that the operation is feasible from an administrative, technical, financial, and commercial point of view. It must also include everything related to the international aspects of the operation and production. Elements to be taken into account:

  • International Aspects:

-Export price
-International logistics
-Formal requirements to export/import
-Tariff and non-tariff barriers
-Quotes (INCOTERMS)
-Contracts, forms of payment, negotiations
-Containers/wrappings
-Insurance
-Advertisements
-Distribution
-Market development activities
-Contacts abroad

  • Production Aspects: 

-Raw materials
-Quality and standards
-Capacity 
-Installations
-Localization
-Manpower
-Subcontracting
-Suppliers
-Technology
-Inventories

Risk Analysis

According to PromPerú, an important aspect of the export plan is “to identify potential problems that might have a negative impact on the project.” It is also necessary to specify the contingency plans to counter same. One of the easiest ways to mitigate risks is to take out export credit insurance to cover credit sales in the international market (exports under credit conditions). Firms providing these services point out that generally insurance protects exporters from the following risks:

  • War, civil war, revolution or occupation of a territory by foreign forces
  • Expropriation or confiscation, requisition of merchandise
  • Delay in transferring foreign currency for lack of the latter or government instructions
  • Cancellation of export or import permits
  • Unilateral cancellation of contract by the importer’s government

Financial Projections

Con Tu Negocio specifies that many SME’s lack adequate financial projections that are necessary for preparing solid export plans. In this regard, entrepreneurs should record: the resources available to complete the export project, historical financial information, cash flow, financial statements and key financial information on liquidity, activity and profitability.

Summary

This is a summary of the export plan. Its purpose is to concisely depict the current status of the firm and the plans for the new operation. According to Con Tu Negocio, it must include the profile of the firm, a precise description of its business, an explanation of the product or service offered, the competitive advantages and financial requirements.

Creating an adequate export plan will not only help SMEs from a commercial standpoint but it will enable self-evaluation and generate greater participation in, and awareness of, the operation. As with any management tool, the plan must be flexible and adaptable and must be review as business progresses.

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