Efic’s latest Exporter Sentiment Index (a survey of more than 1,200 small businesses) found that 46 per cent of businesses expect the economy to be in a better state in the next 12 months, an increase of 6 per cent since its last survey in February 2017.
A boost in market sentiment is likely to lead to an upward trend in export operations during the coming year, with 63 per cent of exporters reporting that they expect financial performance to improve in the next 12 months.
While confidence about the year ahead is high, there are several challenges identified by SME exporters – most notably fluctuations in the exchange rate: 45 per cent of respondents highlighted exchange rates and 43 per cent identified economic uncertainty as the biggest challenges for the year ahead.
Finally, in another sign of expected growth in the Australian economy, SMEs are signalling they will increase direct investment into overseas markets, with 53 per cent saying they plan on increasing overseas investments over the next 12 months. This positivity is expected to translate into a better bottom line, with 58 per cent of exporters expecting to increase profitability in the year ahead.
For SMEs not already involved in the export market but exploring this option to enhance their growth, these steps are important considerations to make the transition to exporter a successful one:
1. Develop a robust export strategy and stick to it
When you start exporting, you may find that a lot of different options come across your path, whether they are potential markets, buyers or partners that aren’t part of your original plan.
It can be easy to get sidetracked, and while it’s important to consider your options carefully, stay focused and stick closely to your export strategy.
2. Consider the position of your product or service in a new market
When thinking about how your product or service will be successful overseas, you need to consider your positioning, which will include price points, quality and competition among other things.
3. Build an experienced and flexible team
You need to have the expertise and resources to support you when you win a big export contract, but in the early years of exporting the flow of work may fluctuate.
Getting the right team, with the ability to be flexible, is key.
4. Identify strong local partners
In the export game, relationships are everything: finding and working with great local partners will set your exporting business up for success.
5. Test, test and test again
Too many SMEs make the mistake of launching their product or service too early, without testing how it will be received in the local market.
If a product is well-received in one market, this may not be the case in another market.
Andrew Watson is the executive director of export finance at Efic.