Exporting when you’re a micro-enterprise or SME

Launching into foreign markets isn’t just for the big guys. You don’t need hundreds of hands on deck and millions of euros in the bank to export your products or services abroad. You can make your micro-enterprise an international one all by yourself, or bring your team along for the journey if you run an SME.

In fact, 95% of all French companies that export are micro-enterprises or SMEs. That’s around 130,000 businesses that have been seduced by the rewards of entering new markets:

• increased turnover
• economies of scale
• reduced dependence on just one market
• stealing a march on the competition

But it’s an intimidating prospect for smaller companies. Running a business in your own language, culture and comfort zone is challenging enough. Also, with European economies facing a slowdown this winter, many businesses will understandably look to consolidate their existing markets rather than conquer new ones.

Yet, if (and only if) an SME or micro-enterprise has the resources to do so, there are compelling arguments for growing a business during an economic downturn. Launching into a foreign market may be one such way to go.

But where do you start? By answering some fundamental questions. Like these:

Exporting is one of several market entry strategies, which also include:

• licensing/franchising to other companies;
• partnering with a company in the target market;
• acquisition of a company based in the target market.

Exporting is seen as the fastest-entry, lowest-risk strategy and is the most common amongst small businesses, which is why we’ll be making it the focus of this article.

Exporting means you continue to produce your goods or services at home and then market, sell and ship them to customers abroad. This can be done directly or indirectly:

• Direct exporting - the exporting company sells directly in the target market, either to the end customer or to sales agents or distributors who are based there. Cutting out the middleman like this allows for greater control over sales and marketing but also requires sound knowledge of the target market.
• Indirect exporting - the exporter sells to a domestic intermediary, who then uses their knowledge of the target market to sell to buyers there and, in return, takes a slice of the sales revenue.

An export strategy will demand a budget and enough financial reserves to see the project through to the end. Whatever the size of your company.

If you’re a self-employed jeweller who relies on online sales, then at the very least you will likely need to translate your website into the language spoken in the target market. Even if you’re France-based and selling to French-speaking Belgians, your online advertising will need to reflect cultural differences if it’s to have maximum impact.

If you run a 3-person SaaS business, you may need to set aside a budget for travel and tickets to international trade fairs to make yourself known to potential foreign customers.

If, for example, your 20-employee SME makes bespoke bathtubs, you will also need to train your staff in the skills needed for handling international orders.

Money aside, there are non-financial resources that you’ll need to dedicate to your exporting plan: managing legal and regulatory aspects, increased production and logistical questions will take time and energy.

You will also need the internal bandwidth to fulfil what is perhaps the most important element of any export strategy: the market research…

Market research is key to any market entry strategy and the more thorough you make it, the clearer idea you will have of the viability of your project.

The simple fact of speaking the language of the target market does not necessarily mean that market will be receptive to what you are selling, although speaking the lingo is clearly an advantage. Similarly, your choice of export market should not be based on one conversation with a lead at a trade fair who registered an interest in you. The decision to export - and particularly where to export to - must be guided by the market research you carry out and the opportunities you identify.

It’s possible you’ve already sold to international customers without explicitly trying to; our freelance jewellery maker may find some interesting website traffic coming from, say, Italy. Our SME manufacturing luxury bathtubs may have had a cluster of requests for brochures from Tokyo, suggesting the product might be ‘big in Japan’. Such data could prove very useful in your market research.

You can read our advice on how to conduct effective market research in a separate article. The results of your research should provide answers to key questions relating to:

• Your product - What’s the demand in the target market and the potential for growth? Which of your products will bring something new to the market?
• Your competition - How saturated is the market? Will your competitors be providing the same thing but without having to pay the transport costs?
• Your pricing - How competitive are your prices once you’ve taken into account the cost of shipping? Which markets will support your minimum price?

If you’re going to have customers who speak a different language to you, you will need to sell to them and provide customer service in that language. What’s more, it’s not just language but also cultural differences that need to be considered.

For marketing, you shouldn’t expect Google Translate to convert a successful domestic campaign into a hit abroad. If neither you nor your team have highly proficient skills in the relevant language, then a native-speaking copywriter may be a wise investment to help you find the right tone of voice and to avoid embarrassing mis-translations.

The same goes when it comes to local rules and regulations. A misunderstanding over what you’re allowed to sell in a given country can very quickly leave an exporting project dead in the water.

Language can be a barrier that keeps entrepreneurs penned into their own markets and comfort zones. The looming pile of admin and paperwork is another. But there are plenty of organizations out there whose very job it is to make cross-border trade as easy as possible. Let’s take a look at some…

There is a wealth of help available for micro-enterprises and SMEs that are looking to export, and it comes on a European, national, regional and even local level.

• Helping European businesses trade across borders is a top priority for the European Commission. It provides advice, support and financing specifically for SMEs and entrepreneurs looking to export within the EU as well as for those looking beyond Europe’s borders.
• The Commission has also replicated its successful Erasmus scheme to create opportunities for new business owners via the Erasmus for Young Entrepreneurs program.

• Team France Export is a one-stop-shop for all the public help that’s available from French regions, Chambers of Commerce and Industry, BpiFrance and so on.
• Business France exists to help France-based companies export successfully, and runs the VIE scheme, which puts promising, young business school graduates looking for international experience in touch with small businesses that have missions such as market research to carry out abroad.
• La French Tech gives French technology companies with a European vision the opportunity to grow in other markets by establishing relationships with people and companies in the German ecosystem.

Is the town where you live part of a twinning program with similar towns in other countries? If so, these partnerships can be a useful starting point in an exporting journey, as they provide opportunities to join trade delegations and build a professional network in other markets.

Exporting is an exciting and potentially lucrative challenge for small businesses. Not all those who try succeed: last year almost 38,000 French companies began on an exporting journey while 31,200 suspended theirs, according to state sources. With a plan, hard work and some help, you can boost your chances of expanding into foreign markets and prospering there.

Qonto is one such source of help for businesses at all stages of growth. We provide fast, simple automated solutions that keep all your business finance needs neatly and safely under one roof. Let us focus on the admin and dirty work while you put your energy into growing your company. Open a 100% online account in less than 10 minutes.

• “European Champions” Servus Scaleup podcast by La French Tech, Munich