How to Start Exporting Your Products — and Avoid the Biggest Mistake Manufacturers Make
By Roxanne Baumann | Founder & CEO, Baumann Global, LLC
Over the years, I've worked with hundreds of U.S. manufacturers, helping them develop international business strategies and expand into global markets. One of the most common mistakes I've encountered starts with something that seems like very good news: an unexpected export order.
A manufacturer receives an unsolicited request for quotation from a customer overseas. Perhaps it's a distributor looking for a particular product, or a company that somehow discovered the manufacturer's website. Sometimes an actual purchase order arrives. The sales department responds, processes the order, and ships the product. Everyone is pleased. The company has generated additional revenue from an international customer. But here's what has always troubled me: Nobody stopped to ask why that customer found them in the first place.
What was special about their product? Why did the customer choose an American manufacturer rather than a supplier closer to home? Was it a unique capability, better technology, superior quality, or simply a product that wasn't readily available in that market? And perhaps the most important question: If one customer in that country needed our product, how many others might need it, too? Too often, nobody asks. The order gets shipped, the revenue is recorded, and everyone moves on to the next opportunity. Then the company waits for another unsolicited international order to arrive. That's how many manufacturers begin exporting. Unfortunately, it's also how some continue exporting for years.
Exporting by Chance Rather Than by Design
When I developed Wisconsin's ExporTech™ program, I worked with 450 manufacturers at many different stages of international business development. Some were just beginning to explore exporting. Others were already selling products in multiple countries. What surprised me wasn't how many companies had international customers. It was how frequently they had never investigated why those customers were buying from them. I'd ask how they selected their export markets. Often, they hadn't. A foreign customer contacted them. A distributor expressed interest. Someone met a potential international buyer at a trade show. An order came in, and suddenly the company was exporting to another country.
There's nothing inherently wrong with that. An unexpected order can be a terrific opportunity. But an unsolicited export sale is not the same as a deliberate international growth strategy. I've seen manufacturers proudly report that they sell products in 10 or 15 countries. Yet when we begin discussing their international business, they often have little understanding of which markets offer the greatest potential, how much business their dealers / distributors are developing, or where additional sales opportunities might exist. They know where they've shipped products. But do they know where they should be growing their business? That's a very different question.
What Is That International Order Really Telling You?
Manufacturers should view an unsolicited international inquiry as more than a potential sale. It's also a piece of market intelligence. Someone, somewhere in the world, has identified your product as a possible solution to a business problem. They have taken the time to find you. That's worth investigating. Perhaps your company has a competitive advantage that isn't obvious in the US market. Perhaps a particular industry vertical overseas has a growing need for your technology. Maybe a competitor isn't adequately serving customers in that region. Or perhaps the opportunity is relatively limited. The point is that you won't know unless you investigate. Before deciding to expand into an international market, manufacturers should consider several fundamental questions:
• Product potential: Why is our product attractive to customers in this market? What competitive advantage might we have?
• Market opportunity: Is this an isolated sale, or could there be broader demand for our products?
• Market selection: Which countries offer the strongest opportunities for profitable international growth, with least amount of risk?
• Sales channels: How can we reach additional customers? Do we need dealers, distributors, reps, OEM relationships, or a direct sales approach?
• Profitability: Can we develop this market competitively while maintaining attractive margins? And ultimately….Can we make money?
• Leadership: Who within our organization is responsible for turning these opportunities into actual business growth?
These aren't questions that require a company to commit immediately to a major international expansion. They're questions to help management determine whether an opportunity deserves further attention. And they're particularly important for manufacturers that already have international sales but haven't evaluated their full market potential.
More Countries Don't Necessarily Mean More International Growth
Another misconception I've encountered is the assumption that selling in more countries automatically means a company has a stronger international business. Not necessarily. A manufacturer selling modest quantities into 20 countries may have considerably less international growth potential than one concentrating its efforts on 3-5 carefully selected target markets. International expansion requires resources. Sales development, distributor relationships, customer support, pricing, marketing, and management attention all require investment. Spreading those resources across too many markets can produce disappointing results. Sometimes the greatest opportunity isn't finding another country to enter. It's developing the markets where you're already doing business.
Are your distributors reaching the right customers? Are there applications or industries you've overlooked? Is your company providing the support needed to develop additional sales? Are you actively managing channel partner objectives and performance? And, importantly, does anyone within your organization have clear responsibility for making that growth happen? These are the kinds of questions manufacturing leadership should be asking.
Moving Beyond Opportunistic Exporting
I frequently heard an interesting comment from manufacturers as we worked through their international business challenges: "We didn't know what we didn't know." That observation has stayed with me. Most manufacturers are exceptionally knowledgeable about their products, production capabilities, and domestic customers. But international business introduces different markets, competitive conditions, distribution relationships, and management challenges. Experience in domestic sales doesn't automatically translate into an effective international growth strategy. And having international customers doesn't necessarily mean a company is managing its international business strategically.
The good news is that manufacturers don't have to start from scratch. Existing export sales, distributor relationships, customer inquiries, and market experience can provide a valuable foundation for future growth. The opportunity is to evaluate what you've already accomplished, identify what's working and what isn't, and determine where your company should concentrate its efforts.
That's the thinking behind ExportScale™, the international growth methodology I developed through Baumann Global. ExportScale™ helps established manufacturers assess their international business, identify opportunities and obstacles, establish market priorities, and implement the leadership and accountability needed to achieve predictable and sustainable growth. Because the ultimate objective isn't simply to export more products. It's to build a profitable international business that doesn't depend on waiting for the next unexpected order.
Roxanne Baumann is Founder & CEO of Baumann Global, LLC, and the original architect of Wisconsin's ExporTech™ program, which has helped more than 450 manufacturers develop international expansion strategies. Through ExportScale™ — A Baumann Global Methodology™, she provides executive-level international growth strategy and fractional leadership to U.S. manufacturers.
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