You are a small to medium-sized company that sells mainly in the domestic market.
In which other markets to expand? How to choose it?
The literature suggests studying the various markets and finding the best one for your products. So, once you find the best one look for local agents or distributors.
From our experience, this way of proceeding is not the most effective for a small business, but not even for some medium-sized businesses. Why?
We suggest this kind of approach in 5 steps.
STEP 1: WHERE DON’T YOU WANT TO SELL?
You have first to think about what markets you do not want to expand your business.
You can do a fast macro analysis by yourself.
For example, in Globartis we saw that many companies in the European Union prefer to find partners in the European Union as the first step to expand the business abroad.
The reason is that there are no problems with regulation and custom duties, and it is not necessary to pay consultants/experts on those topics.
So, first step: exclude countries in which could be too complicated for you to export.
STEP 2: START TO FIND DISTRIBUTORS AND AGENTS IN A CHEAP WAY
You do not have to spend thousands of Euros to contact the consulting firm, export agencies, and chambers of commerce by asking them contacts of potential local distributors.
Just go on the web and search on Google what you need like “distributors of wine in Thailand”, “Thai international sales rep”, “food importers in Thailand”, etc.
I wrote a guide on how to use the web to find partners.
Of course, in this phase, you can post your business opportunity on our B2B website, like “looking for distributors of Italian wine in Thailand”. Posting is free and the opportunity will be seen by thousands of entrepreneurs and managers.
The idea is to avoid spending thousands of Euros in advance.
STEP 3: CONTACT THE POTENTIAL BUSINESS PARTNERS
You have found some business contacts by yourself.
Analyze in a very simple way what they are selling and try to understand their business.
Then, contact them and present your products/services and just ask them if they are interested to sell/buy them for you.
It sounds easy and simple, and it is.
The most of the business negotiations are stopping in this phase because the counterpart is not interested to sell some kind of products for different reasons (pricing, complicated shipping, product not in target with his product offer, etc)
STEP 4: NOW IT IS TIME FOR THE MARKET RESEARCH
If you have found a person/company that could be interested to sell your product.
It is time to do market research to understand:
- Who is exactly the potential business partner
- The price breakdown
- The local market for your products and/or services
- Local compliance and regulation
I just want to underline here that it is almost impossible to understand the real local market for one product or service. Only local people that work in a sector knows the truth about one specific sector.
Generic consultants/agencies often do not how a sector really works.
It is always a good idea to ask the candidate business partners analysis or numbers, before meeting him in person, to check the data provided.
STEP 5: START THE NEGOTIATION
You have a person that is interested in your offer, you have some data and information about the local market. It is time to start the “real negotiation” by speaking about pricing, shipping, volumes, etc.
We know personally many entrepreneurs and managers that bought market research of several markets, but didn’t conclude any agreement because they didn’t find any reliable local business partner.
Keep in mind that a market research is getting obsolete after 2-3 years (it depends from sector to sector).
The approach that we suggest can be summarized with one word: TRY.
You should always try to find new international sales agents or distributors in autonomy, it will cost your time, but not expenses of export consultants, etc
It doesn’t mean that you should act randomly. You have to do your market research, but it is useless to invest too much time and money in advance to have a detailed and accurate market research.
What we wrote is valid for small and small-medium firms. A medium-large company tends to approach differently the export in new markets.
Are planning to expand your business abroad? Find distributors wholesalers and retailers on our B2B portal