by Ben Wilson
Venturing into international markets is a significant step for Australian businesses. Success hinges on a myriad of factors, including strategic planning, safeguarding intellectual property, and leveraging government support.
The costs and pitfalls associated with beginning the export journey can be highly impactful to a domestic business, so an appropriate amount of care and strategic consideration should be undertaken.
Here are some of the key areas for Australian business owners and directors to consider.
Market Research & Forecasting
The bedrock of any successful overseas expansion lies in understanding the market landscape. By preparing informed and methodological financial forecasts based on expert advice, directors arm themselves with the knowledge of expected volumes, seasonality and pricing. These considerations are invaluable in determining the potential earnings of an overseas opportunity, from which you can assess the level of capital to commit to these activities.
Intellectual Property (IP) Considerations
For many businesses, their point of difference becomes the Intellectual Property they develop over years of operation. This is often the reason an overseas expansion is pursued – a lack of similar IP in the target market. It is however crucial for business owners to consider the necessary steps to safeguard this asset upon entry into any new market. Important considerations include the international registration of the Intellectual Property, and protective structures to insulate your assets.
Risk Management & Structures
Entering overseas markets presents a set of risks that may not be present in the ordinary Australian trading environment. These risks include governmental risks, inflationary risks and currency conversion risks. Each of these requires specific advice and strategy in order to mitigate the risk.
It is also crucial to consider an appropriate trading structure for the overseas venture for the protection of your Australian business. Depending on the circumstances, it may be appropriate to use an overseas subsidiary, or in other circumstances it could be advantageous to export your goods directly from Australian ports. In all cases, it is important to seek appropriate legal and financial guidance regarding the proposed business structure.
Financial Support and Grants
Fortunately, in assisting small businesses, the State and Federal governments have a number of programs providing assistance in the form of loans, reimbursements, or grants for businesses conducting exporting activities.
The most comprehensive support program on offer is known as the Export Market Development Grant run by Austrade, providing a reimbursement of up to 50% of the cost of eligible exporting expenses. The program is currently in its third round, though applications are currently closed, with Austrade indicating a replacement program in early 2024.
Export Finance Australia provides loans, bonds and guarantees to eligible businesses in support of specific export requirements when a bank is unable to provide funding. This program requires repayment, however, it can provide funding through a director guarantee where asset security would have been traditionally required.
The TradeX and Duty Drawback programs provide GST and Customs Duty exemptions for business importing their input goods, with the intent to export the goods after processing or treating them in your business. TradeX GST exemptions must be applied for in advance of importing any goods, however, Customs Duty drawbacks can be applied for within 4 years of importing the goods once you can provide evidence it has since been exported.
How We Can Help
We have recently seen a notable uptick in export activity and opportunities for small businesses. While it can be a daunting decision to make, any uncertainty and risk can be mitigated by consulting experienced expert professionals to develop a strategy considering all possible factors.
Our team at Lambourne Partners Consulting have recently provided advice for a number of small businesses across various industries to kickstart their export operation. To get in touch with our Consulting team, please contact us below or call 02 4969 6600.