For many Canadian companies, a logical way to deal with market ups and downs and uncertainty is to start selling into new markets, until their survival depends less on the financial well-being of one country.
Diversifying helps companies take advantage of changing trade patterns that offer new supply, production and partnership opportunities.
But being successful in a new market is no small feat for a company that has never looked beyond Canada and the U.S. borders.
Here are 5 steps you can follow to start you on your diversification journey.
Research. Research. Research. The top three things you need to consider before taking a leap of faith. Start by looking at countries Canada has FTAs with.
Ask yourself these questions:
- What’s the potential opportunity in the market?
- How easy is it to do business? (Regulatory and entry barriers)
- Are there any political or cultural sensitivities and how could they impact your business?
- Who are my competitors and what are they doing?
- Are there any other Canadian companies doing business there? Could I learn from them?
- Does my company have a business case for doing business there?
- Develop a unique selling proposition (USP) for your company to give you a clear picture of your competitive advantage.
- Research your competitors. Know them as well as your own company – sales, growth, sales force.
- Compare your findings against your own company. Can you not only compete, but win in that market?
There are many ways to enter a new market, each with their pros and cons. Here are six different avenues to pursue.
- Partner with distributors.
- Sell through agents.
- Buy or merge with a local company.
- Build from the ground up.
- Establish strategic alliances.
- Set up a sales/marketing office.
Finding connections require both low and high-touch methods.
- Tradeshows – the original networking event. They can be successful if you prepare and do your homework in advance. Learn how to get the most from your trade show.
- Expand your network. Are your customers or their customers doing business in your target market? You won’t know until you ask. Leveraging your network can help you develop potential business relationships efficiently.
- Use an agent, distributor or supplier in market that understands the unique business culture.
- Piggyback on another company. It may not be the easiest strategy, but partnering with a company already doing business in that market that views your partnership as an opportunity can work.
- On-the-ground expertise. The Trade Commissioner Service (TCS) is an excellent resource to help you enter new markets. EDC possesses real-time market intelligence and can also help you make connections in many markets around the globe.
- Associations. There are more than 50 sector-based associations in Canada that have global networks and want to help their members find new business opportunities. The largest trade association is Canadian Manufacturers & Exporters. The Canadian Association of Importers and Exporters is another great resource, as is the Canadian Chamber of Commerce.
- The click of a mouse. It may sound simplistic, but in today’s digital age, combined with a little sweat equity, can be a great leads-generation source for potential new customers.
Hopefully your research on making connections leads to possible new business opportunities, but there are few other avenues to pursue.
- Preferred Supplier List. One way to find new customers is to position your business to be on a preferred supplier list (PSL). Many large companies and governments maintain lists of pre-qualified “preferred vendors.” Being on a PSL enables you to enter new markets, increase sales and pursue opportunities that might not otherwise be available.
- Visit the market. If you have made connections, visiting the market in person is a good idea. Many companies want to business with people they know and trust. A handshake can make the world of difference.
- The “follow-your-customer” strategy, for your Canadian customers with overseas affiliates, may also work for you. If you sell your products to a company in Halifax, for example, and that company has an affiliate in Mexico, you may also be able to sell directly to the Mexican affiliate.
- Tap into a supply chain. Going global for many smaller companies and finding customers can be done by becoming part of a multi-national company’s supply chain.