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Exporting: When and how to go International

08 September 2016 by National Bank
How do you know that your business is ready to embark on the exportation train?

How do you know that your business is ready to embark on the exportation train? We discussed the topic with Michel Leblanc, President and CEO of the Board of Trade of Metropolitan Montreal, whose World Trade Center Montreal unit has been working with small businesses who wish to export for the past 30 years.

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What drives a company to want to develop the international market?

Michel Leblanc: Our Montreal, Quebec, and Canadian markets are limited, especially when you have a niche product or service. When a company realizes that their product or service could be sold or used abroad, they often quickly initiate an internationalization strategy.

How does a company know it’s ready to take the plunge?

M.L.: Businesses that want to expand internationally should be looking for activities and training such as the ones we offer at the Board of Trade on the markets to target, or different ways of doing this, for instance. These activities can offer resources, general information or help acquire specific skills. It also represents an opportunity to meet specialists, but also other businesses who are in the same position as you are or who have other experiences to share.

Is exporting suitable for all types of businesses?

M.L.: Almost, since it takes on a variety of forms. We think that the vast majority of successful businesses here at home have the potential to become businesses that export themselves successfully. Anything can be exported, which doesn’t mean that exportation is physical. The activities can often continue to go on from Montreal, for example, and in certain cases, people don’t even have to travel to deliver the service or product. However, certain local services seem to be less exportable. A hair salon, for example, will not necessarily start thinking about an exportation strategy, but may nonetheless have an international strategy. In the case of Couche-Tard, originally a street corner convenience store, they developed a business model and exported it by making acquisitions abroad. This example clearly illustrates that an international strategy is possible in virtually every sector.

What are some important preliminary steps before going abroad?

M.L.: We are increasingly promoting the concept of born global: we encourage junior entrepreneurs to think about international development right from the start. Some of their decisions will thus be made in accordance with this strategy. Certain things must then be validated by a market study or an exportation plan. Lots of factors have to be taken into account, such as cultural elements, places where there is demand for your product or service, finding Quebec businesses already present on the targeted market… All this information allows us to evaluate and validate the pertinence of selecting Japan over China, for example. It should also be pointed out that in many countries, interpersonal relations are very important. One must look internally to ensure that you not only have the right product or service, but also the right people, who love to travel abroad and who will preferably be there for the long run since changing interlocutors midway can sometimes be very badly perceived. One must then find out more about any existing help mechanisms.

Precisely, what tools are available to businesses looking to go international?

M.L.: Export Québec programs can help them. There’s also the EDC that offers services to ensure that companies who do business internationally, especially when certain markets involve risks concerning payments or commercial partners over there. Your financial institution is also a resource of choice to guide you in your international development projects. Its specialists will help you finance your projects abroad, decrypt these new markets, set up international payment mechanisms and compose with the risks associated with non-payment and currency fluctuation.

Does choosing to export involve any major financial risks?

M.L.: The financial risk may be substantial for small or medium-sized businesses with modest sales figures. For large businesses, the risk is not that high. There are unfortunately some very promising small businesses that don’t dare make the jump because of this risk. The Passeport PME program has precisely been put in place by the Board of Trade, the National Bank, the Caisse de dépôt et placement du Québec, and Export Québec for the purpose of reducing this financial risk for these small businesses that try to develop new markets. Within the context of this contest, we select about 20 businesses per year and accompany them on an international mission.

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