SMEs: Explore new markets in successful years

SMEs should not ignore international markets, however, should also not be blinded by their fascination ... (Translation from German)

...- a case study based on the German market which may be useful for other markets too

Germany is called ‚export champion’ – however, the impressive figures only reflect to a minor percentage the small and medium-sized companies.

The sheer total size of all exports is put into perspective, however, when looking to its neighbour countries with regard to the exports per inhabitant: Such figures show – as per to the CIA-Worldbook 2005 – the following results: Germany abt. US$ 12.330, Austria abt. US$ 14.900, Switzerland abt. US$ 19.800 and Belgium even abt. US$ 25.900. Accordingly there still is room for improvement, especially as the industrial basis of these neighbour countries are not really comparable with Germany.

Facts and hindrances

If one takes into consideration that the export business in this case reflects abt. 30 % of the total GDP, the average German company should export roughly this percentage. As, how- ever, bakeries, shoemakers as well as trading companies - if at all – export at smaller rates, a ’healthy average’ for the remaining industrial companies would be an export percentage of abt. 50 – 60 %.

This is by far not reached yet by SMEs as the local market was for quite some time sufficient for them. And for that reason they did not really care for foreign markets. Marketing and sales across the borders remained a field of growth which did not cross their mind: “Why should I bother for foreign markets, if I can sell without problems here ?”

From my own experience:
Who deals with international marketing and trade will certainly quite often have met this ‘disavowing’. I never forget that a company years ago told me ‘We are absolutely satisfied and cannot even supply what is asked for’. 6 months later I called them again and had to learn that they were shortly before becoming bankrupt. The reason: They concentrated too much on just a few large clients whose orders were cancelled due to the crises in Asia and Latin America at that time.

This carelessness in most cases is basing on the fact, that the companies are privately owned or owned by a small group of people. Unless they have already some experience in export sales one cannot assume that one can find internationally thinking personnel.

Advantages and support

The international economies are in a permanent move and we have to participate – to our own benefit:

Exporting does not only create or stabilize working places in the home market but the respective enterprise will also become more independent from the local business climate and thus more healthy and resistant against economic fluctuations anywhere in the world. In general to export is a good sign of a vital and competitive enterprise which can resist a local recession quite well. And this will also be noted as well by clients (for their own security choosing a supplier) as by the competition.

Some countries do have quite good export supporting agencies – who even are active in other markets and give advice – as per their general knowledge – from the respective local market.

What they cannot do, however, is to accompany the companies practically into the different markets - and if, the company has to deal with quite some specialists for each separate market. This is mainly due to the fact that they do not have the insight into the company and its future plans, i. e. it is difficult for them to adapt the overall marketing procedures in a way which suits different markets (for this specific company and its specific products) at one time and also is oriented at the financial possibilities of the company.

Therefore companies may often have very good market information, however, do not know how to transform them into soon positive results as a proper coordination of all facts and figures with the internal and external possibilities of the company are not possible.

Especially for Europe – the biggest conglomerate of industrialized markets – with its different languages and mentalities. At this point in time consulting companies having specialised in international marketing and sales procedures begin with their support – focused on this specific company.

Seven rules before internationalizing

When preparing for export business the following focal points should be taken into consideration:

1. Look for professional support who analyses your business potential and identify what you should be able to handle in order to be successful in the international markets . and possibly also where.

2. Look for professional support to evaluate the potential of your personnel. Offer an incentive to the willing people so that they study further according to the needs of the international markets – for example through internal or external trainings and seminars.

3. The elaboration of a thoughtful marketing plan will give a lot of hints and facts and you can fall back on them and adjust your targets and procedures if need be.

4. Try to think ‚global’. Look at trends in magazines of your industry or ‚feel’ them during meetings of your industry groups. Take your time to learn more about international marketing and how the instruments can be used for the benefit and future stability of your company.

5. Do not underestimate international sales. It is not really easy – yet it is also no miracle and it can be very profitable !! In fact many companies err in their expectations just because they had a contract from another country once in a while.

6. Learn how to treat international clients/markets. Until you have your own employee with special knowledge you should rely on professional assistance which can also lay the basis for your future organisation and handling, thus saving a lot of time and money otherwise spent into ‘trial and error’. You do not do good to your company, however, if you cannot really rely on the assistance – i. e. sufficient proof of ability and testimonials should be available.

7. Set-aside a special budget for your internationalization. If you have a successful business in your home market right now it is reasonable to plan some of the profits for the future.

Conclusion: Undock from the local business climate

The best moment to prepare oneself is always the time when one is not forced to do it. As long as the business on the home market is successful it will be relatively easy and also the resources needed are available. Decision makers should use this security to work towards the future i. e. not to depend solely only on one market/region (or only a few big clients).

written by Michael Richter on 25.09.2007 at 11:50.

*

[Overview]