If you are just starting out in export business, you need to pay close attention to this post. I want to share with you 4 costly mistakes beginners make in export business and how you can avoid them.
As a beginner, you are more likely to make lots of mistakes the first time and that’s OK. By sharing this post with you out of experience, I want to help you avoid the more common and obvious mistakes.
My goal is to equip you with information nobody else would give you in any training or e-book.
As lucrative and fulfilling as export business is, many first-time exporters still come out with more negative stories than positives. If you are thinking it can’t happen to you, that’s the more reason you need to pay attention.
4 Costly Mistakes Beginners Make in Export Business
1. Lack of Preparation
The first mistake beginners make a lot is lack of preparation. Many first-timers believe they are ready for export business; they are not. The first challenge they face, you find them running from pillar to post in desperation because they have no idea what to do.
I can’t recall who said this but it’s true that victory loves preparation. If you must succeed you must prepare, more so in international trade.
Prepare yourself, you will be doing business with people from other countries who speak a different language and understand life differently. They use a different currency and have different sets of financial rules. It’s totally different from what you are used to in your own country.
Do you have enough money to complete an export cycle? Do you have a solid marketing plan? What contingencies do you have to cushion a disaster? Think about that.
How would you deal with a customer who gives you a very tight delivery deadline? How would you deal with a buyer who does not understand English but wants to speak with you on Skype to make sure you are who you say you are?
What would you do in the event of theft or natural disaster which could wipe out your entire investment overnight? How about a buyer who flat-out refuses to pay you because they are not satisfied with the quality of your products even though you followed their instructions all the way?
These things happen and if you are not prepared for them, you will be caught out on the losing side.
Simple things like getting insurance for your goods, getting a language translator app, insisting on, at least, a letter of credit to ensure you get paid, these things go a long way to keep you in business. Sadly, many people overlook them until it’s too late.
Don’t let that happen to you. Make sure you are prepared to take on the export business world.
This post about export planning will walk you though how to plan for your export business, then you must arm yourself with other tools and resources to make things easier for yourself.
2. Going big the first time
This is arguably the costliest mistake I see beginners make in export business – the need to go big. Going big is not bad in itself, but you are just getting started and you need to start with an amount of money you can afford to lose.
For the first time, you need to test your business model using a small amount of money. You will gain vital experience, you will be sure that your business strategy works, and you can convince any banker that you know what you are doing.
Many people run from one bank to another, looking for export loan. There is a reason banks don’t give export loans to first timers. If you have not done any export business before, you have no idea what you are doing, period. I explained that in this post about export financing.
Everybody wants to go big but as beginner, start small. Instead of throwing N5 million into an unproven business, start with N500k.
Assumption, they say, is the poorest form of knowledge. The second mistake export business beginners make is they assume a lot things. In export business, you don’t assume that six is the same as half a dozen unless it is clearly spelt out to you in writing.
Never assume anything. If it’s not clearly stated/written, don’t assume or imply it. Do not assume, for example, that your buyer would know about the bad weather or terrorists in your country which made you miss a deadline. You must either communicate this delay, do everything your power to meet the deadline, or both.
If a customer requests for a particular quality of a particular product, and you cannot get that specified quality, don’t assume that the buyer will understand. You must communicate the change of plans and ask what the buyer would like to do.
This is very important because most times a foreign buyer will give you precise quality specifications of what they want to buy. You must not assume that they would settle for the next best thing.
Don’t assume that your sourcing agent, for example, would know how to package the products since they have been in the business longer than you have. You must make sure they are doing what you want them to do.
There are many instances where it would be convenient to assume something and just move on. Don’t assume anything. Pay attention to detail, every detail.
4. Blind Trust
If you do business with a particular customer 5 times and they make good on their payment 5 times, don’t trust they will do so the 6th time. This is because, after a while, you start to hear people say things like ‘trust me, you will get your money as always.’
Rigorously follow every protocol that made them pay you the previous 5 times to make sure you get your money.
Trust is good for business but in international trade where the other party could just up and away with your money, you want to make sure you protect yourself.
Export business is very good business, there is no doubt about that. If you want to be on positive side of export statistics however, you must be very careful not to make these mistakes. We learn from mistakes, yes, but it does not say they have to be OUR mistakes.
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