Key points
- Export businesses are typically more productive than those who stay on home soil.
- There are many grants and other support services available for new exporters.
- SMEs make up 93 per cent of all Australian exporters.
Family owned, Tasmania-based business Smitten Merino has won numerous awards for its export prowess, including the 2023 Tasmanian Export Award for Small Business.
Now shipping to the USA, UK, Canada, New Zealand, China, Japan and, more recently Saudi Arabia, Smitten Merino earns about 20 per cent of its revenue from the export market. This figure is growing 2 to 3 per cent each year.
“We planned to export from the beginning,” says Nicola Mason, CEO, co-owner and designer.
“Because it is such a seasonal brand, we thought it would be perfect if we were busy in the southern hemisphere in our winter, and in the northern hemisphere the rest of the year. That way we’d be equally busy during each month.”
Export is an excellent growth strategy for small businesses, says Shirley Ng, National Manager, International Competitiveness at Australian Industry Group (Ai Group).
“Export is all about business growth, finding new customers and diversification,” Ng says. “But there must be a strategy around it. A business must groom itself to be able to showcase its value to a global audience.”
Top export markets
The best starter markets for Australian small to medium-sized businesses (SME) are ones that are local and English speaking, Ng says.
She recommends New Zealand, Singapore and Hong Kong, before pushing further to the USA and UK, as well as larger Asian markets such as China, Japan and South Korea.
A 2022 report from the Australian Trade and Investment Commission titled Australian State of Exports Report valued the annual Australian export market at $1.56 trillion in turnover.
Exporters, the report said, were 64 per cent more productive than non-exporters, with 93 per cent of exporters being small and medium enterprises.
The top five markets for merchandise in 2020/21 by export value were:
However, the most popular markets in terms of number of exporters were:
Preparing your business for the export market
There are several important steps to take to prepare your business for export, Ng advises.
1. Do your research
Use the research already conducted by government bodies, such as Austrade and its Go Global Toolkit to learn as much as you can about your target markets.
2. Make a plan
Start by seeking clarity around your reason for exporting. Is it about business growth, exploiting extra production capacity or, like Smitten Merino, smoothing out lumpy, seasonal demand? “This plan must include your product, pricing, distribution, marketing, and how you’ll enter the market – via distributors or retailers, etc.,” Ng says.
3. Train your team
“It’s vital that the export skill development involves multiple staff members, not just the business owner,” Ng says. “That way, there’s always someone available to handle export issues and maintain momentum if the owner is occupied with other priorities.”
4. Understand legal and regulatory issues in your target markets
“Look for territories that have free-trade agreements with Australia,” Ng says. “That will make things a lot easier, as these FTAs have facilitated easier market access, reducing tariffs and non-tariff barriers.”
5. Consider tailoring your product and marketing to a local market
Smitten Merino, for example, had a US-specific website built for the US market as Americans use different language around particular pieces of clothing, such as jumpers/sweaters. Ng says certain colours of packaging, words, or images might need to be adjusted for various cultures.
6. Protect your intellectual property
“Having your IP protected in Australia will not help you in foreign markets,” Ng says. “You could also inadvertently infringe on someone else’s trademark.”
7. Understand how costs and payments work
“In international trade, there are what we call Incoterms,” Ng says. “Incoterms dictate who is responsible for specific tasks and payments. Understanding these terms is vital – if you ship products out of your warehouse without receiving payment, you need to know if you can afford to operate that way.”
8. Understand the costs and risks of shipping
You will need marine insurance to cover any mishaps. This insurance not only protects the value of your cargo but also provides coverage in various unforeseen circumstances, according to Ng.
9. Know what government grants and support programs are available
There are numerous grants available to SMEs launching into the export space, including the Export Market Development Grants (EMDG) | Austrade, which Smitten Merino has previously used.
Build your market, your brand and your business
Since beginning its export journey, the team members at Smitten Merino have worked hard to build awareness of their brand in various major markets.
That includes accepting an invitation to be part of a pop-up fashion campaign in New York and another upcoming event in Paris.
These experiences are a long way from the brand’s regular space by Hobart’s Salamanca Markets, but both are as important as each other.
“At the shop, we’ve had visits from busloads of people from China, Korea and Japan,” Mason says. “Every customer is a potential link to a new market.
Ng agrees. “For small companies, this is often their first step into export, when a foreign customer finds their product and asks for it to be sent to them,” she says.
“That person starts talking about it on social media – news travels fast in today’s digital world – and suddenly more orders come from that territory.”
