To achieve efficient sales offerings to buyers in the targeted markets, several
concerns regarding products, literature and customer relations should be addressed.
STEP 1:
Identify product concerns.
Can the potential buyer see a functioning model or sample of your product that is
substantially the same as would be received from production?
Comments:
____________________________________________________
____________________________________________________
What product labeling requirements must be met? (Metric measurements, AC or DC
electrical, voltage, etc.) Keep in mind that the European Community now requires 3
languages on all new packaging.
When and how can product conversion requirements be obtained?
Can product be delivered on time as ordered?
Comments:
________________________________________________
STEP 2:
Identify literature concerns.
- If required, will you have literature in language other than English?
- Do you need a product literature translator to handle the technical language?
- What special concerns should be addressed in sales literature to ensure quality and
informative representation of your product?
STEP 3:
Identify customer relations concerns.
- What is delivery time and method of shipment?
- What are payment terms?
- What are the warranty terms?
- Who will service the product when needed?
- How will you communicate with your customer? . . . through a local agent or fax?
- Are you prepared to give the same order and delivery preference to your international
customers that you give to your domestic customers?
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Export Business Plan - Top
Marketing Strategy
In international sales, the chosen "terms of sale" are most important.
Where should you make the product available: at your plant, at the port of exit, landed
at the port of importation or delivered free and clear to the customer's door? The answer
to this question involves determining what the market requires, and how much risk you are
willing to take.
Pricing strategy depends on "terms of sale" and also considers value-added
services of bringing the product to the international market.
STEP 1:
Define International Pricing Strategy.
- How do you calculate the price for each product?
- What factors have you considered in setting prices?
- Which products' sales are very sensitive to price changes? How important is pricing in
your overall marketing strategy? What are your discount policies?
- What terms of sales are best for your export product?
STEP 2:
Define promotional strategy
- What advertising materials will you use?
- What trade shows or trade missions will you participate in, if any?
- What time of year and how often will foreign travel be made to customer markets?
STEP 3:
Define customer services
- What special customer services do you offer?
- What types of payment options do you offer?
- How do you handle merchandise that customers return?
Sales Forecast
Forecasting sales of your product is the starting point for your financial projections.
The sales forecast is extremely important, so it is important you use realistic estimates.
Remember that sales forecasts show the expected time the sale is made. Actual cash flow
will be impacted by delivery date and payment terms.
Step 1: Fill in the units-sold line for markets 1, 2, and 3 for each year on the
following worksheet.
Step 2: Fill in the sales price per unit for products sold in markets 1, 2 and
3.
Step 3: Calculate the total sales for each of the different markets (units sold
x sales price per unit).
Step 4: Calculate the sales (all markets) for each year - add down the columns.
Step 5: Calculate the five year total sales for each market - add across the
rows.
SALES FORECASTS - FIRST FIVE YEARS
1 2 3 4 5
Market 1
Units Sold _____ _____ _____ _____ _____
Sale Price/Unit _____ _____ _____ _____ _____
Total Sales _____ _____ _____ _____ _____
Market 2
Units Sold _____ _____ _____ _____ _____
Sale Price/Unit _____ _____ _____ _____ _____
Total Sales _____ _____ _____ _____ _____
Market 3
Units Sold _____ _____ _____ _____ _____
Sale Price/Unit _____ _____ _____ _____ _____
Total Sales _____ _____ _____ _____ _____
Total Sales _____ _____ _____ _____ _____
All Markets _____ _____ _____ _____ _____
COST OF GOODS SOLD
The cost of goods sold internationally is partially determined by pricing
strategies and terms of sale. To ascertain the costs associated with the different terms
of sale, it will be necessary to consult an international freight forwarder. For example,
a typical term of sale offered by a domestic exporter is cost, insurance and freight (CIF)
port of destination. Your price includes all the costs to move product to the port of
destination.
A typical cost work sheet will include some of the following factors. These costs are
in addition to the material and labor used in the manufacture of your product: export
packing, forwarding, container loading, documentation, inland freight, consular
legalization, truck/rail unloading, bank documentation, wharfage, dispatch, handling, bank
collection fees, terminal charges, cargo insurance, ocean freight, other misc., bunker
surcharge, courier mail.
To complete this worksheet, you will need to use data from the sales forecast. Certain
costs related to your terms of sale may also have to be considered.
Step 1: Fill in the units-sold line for market 1, 2, and 3 for each year.
Step 2: Fill in the cost per unit for products sold in markets 1, 2, and 3.
Step 3: Calculate the total cost for each of the products - (units sold x cost
per unit).
Step 4: Calculate the cost of goods sold - all products for each year - add down
the columns.
Step 5: Calculate the five-year cost of goods for each market - add across the
rows.
COST OF GOODS SOLD - FIRST FIVE YEARS
1 2 3 4 5
Market 1
Units Sold _____ _____ _____ _____ _____
Sale Price/Unit _____ _____ _____ _____ _____
Total Cost _____ _____ _____ _____ _____
Market 2
Units Sold _____ _____ _____ _____ _____
Sale Price/Unit _____ _____ _____ _____ _____
Total Cost _____ _____ _____ _____ _____
Market 3
Units Sold _____ _____ _____ _____ _____
Sale Price/Unit _____ _____ _____ _____ _____
Total Cost _____ _____ _____ _____ _____
Cost of Goods Sold All Markets _____ _____ _____ _____ _____
INTERNATIONAL OVERHEAD EXPENSES
To determine overhead costs for your export products, you should be certain to include
costs that pertain only to international marketing efforts. For example, costs for
domestic advertising of service that do not pertain to the international market should not
be included. Examples of most typical expense categories for an export business are listed
on the next page. Some of these expenses will be first year start-up expenses, and others
will occur every year.
Step 1: Review the expenses listed on the next page. These are expenses that
will be incurred because of your international business. There may be other expense
categories not listed - list them under "other expenses."
Step 2: Estimate your cost for each expense category.
Step 3: Estimate any domestic marketing expense included that is not applicable
to international sales.
Step 4: Calculate the total for your international overhead expenses.
EXPENSE COST
Market 1 Market 2 Market 3 Total Yr 1
Legal Fees _______ _______ _______ _______
Accounting Fees _______ _______ _______ _______
Promotional Material _______ _______ _______ _______
Travel _______ _______ _______ _______
Communication _______ _______ _______ _______
Equipment _______ _______ _______ _______
Advertising Allowances _______ _______ _______ _______
Promotional Expenses _______ _______ _______ _______
(e.g., trade shows, etc.)
Other Expenses _______ _______ _______ _______
Total Expenses _______ _______ _______ _______
Less Domestic Expenses _______ _______ _______ _______
(Included Above, if any)
Total Intern’ Start-up Expenses _______ _______ _______ _______
PROJECTED INCOME STATEMENT - YEAR 1 to 5, ALL MARKETS
You are now ready to assemble the data for your projected income statement. This
statement will calculate your net profit or net loss (before income taxes) for each year.
Step 1: Fill in the sales for each year. You already estimated these figures;
just recopy them on the work sheet.
Step 2: Fill in the cost of goods sold for each year. You already estimated
these figures, just recopy on the work sheet.
Step 3: Calculate the Gross Margin for each year (Sales minus Cost of Goods
Sold).
Step 4: Calculate the Total Operating Expenses for each year.
Step 5: Calculate the Net Profit or Net Loss (Before Income Taxes) for each year
(Gross Margin minus Total Operating Expenses).
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Export Business Plan - Top
PROJECTED INCOME STATEMENT - YEAR 1 to 5, ALL MARKETS
1 2 3 4 5
International Sales _____ _____ _____ _____ _____
Cost of Goods Sold _____ _____ _____ _____ _____
Gross Margin _____ _____ _____ _____ _____
International Operating Expenses:
Legal _____ _____ _____ _____ _____
Accounting _____ _____ _____ _____ _____
Advertising _____ _____ _____ _____ _____
Travel _____ _____ _____ _____ _____
Trade shows _____ _____ _____ _____ _____
Promotional Material _____ _____ _____ _____ _____
Supplies _____ _____ _____ _____ _____
Communication Equipment _____ _____ _____ _____ _____
Interest _____ _____ _____ _____ _____
Insurance _____ _____ _____ _____ _____
Other _____ _____ _____ _____ _____
Total Intern’ Operating Expenses _____ _____ _____ _____ _____
TIMETABLE
This is a worksheet that you will need to work on periodically as you progress in the
worksheet. The purpose is to ensure that key tasks are identified and completed to
increase the success of your international business.
STEP 1:
Identify key activities
By reviewing other portions of your business plan, compile a list of tasks that are
vital to the successful operation of your business. Be sure to include travel to your
chosen market as applicable.
STEP 2:
Assign responsibility for each activity
For each identified activity, assign one person primary responsibility for the
completion of that activity.
STEP 3:
Determine scheduled start date
For each activity determine the date when work will begin. You should consider how the
activity fits into your overall plan as well as the availability of the person
responsible.
STEP 4:
Determine scheduled finish date
For each activity determine when the activity must be completed.
ACTION PLAN
STEP 1:
Verify completion of previous pages.
You should have finished all the other sections in the worksheet before continuing any
further.
STEP 2:
Identify your business plan audience.
What type of person are you intending to satisfy with this business plan?
The summary should briefly address all the major issues that are important to this
person. Keep in mind that this page will probably be the first read by this person. It is
extremely important the summary be brief yet contain the information most important to the
reader. This section should make the reader want to read the rest of your plan.
STEP 3:
Write a one-page summary.
You will now need to write no more than a page summarizing all the previous work sheets
you have completed.
Determine which sections are going to be most interesting to your reader. Write one to
three sentences that summarize each of the important sections.
These sentences should appear in the order of the sections of your business plan. The
sentences must fit together to form a summary and not appear to be a group of loosely
related thoughts.
You may want to have several different summaries, depending on who will read the
business plan.
INTERNATIONAL BUSINESS PLAN SUMMARY:
________________________________________________
________________________________________________
________________________________________________
________________________________________________
_________________________________________________
_________________________________________________
To Export
Business Plan - Top
Preparing an Export Price Quotation
Setting proper export prices is crucial to a successful international sales program;
prices must be high enough to generate a reasonable profit, yet low enough to be
competitive in overseas markets. Basic pricing criteria - costs, market demand, and
competition - are the same for domestic and foreign sales. However, a thorough analysis of
all cost factors going into a cost, insurance and freight (CIF) quotation may result in
prices that are different from domestic ones.
"Marginal cost" pricing is the most realistic and frequently used pricing
method. Based on a calculation of incremental costs, this method considers the direct
out-of-pocket expenses of producing and selling products for export as a floor beneath
which prices cannot be set without incurring a loss. There are important principles that
should be followed when pricing a product for export, summarized below.
COST FACTORS
In calculating an export price, be sure to take into account all the cost factors for
which you, the exporter, are liable.
1. Calculate direct materials and labor costs involved in producing the goods for
export.
2. Calculate your factory overhead costs, prorating the amount of overhead chargeable
to your proposed export order.
3. Deduct any charges not attributable to the export operation (i.e., domestic
marketing costs, domestic legal expenses), especially if export sales represent only a
small part of total sales.
4. Add in the other out-of-pocket expenses directly tied to the export sales, such as:
- travel expenses
- catalogs, slide shows, video presentations
- promotional material
- export advertising
- commissions
- transportation expenses
- packing materials
- legal expenses*
- office supplies*
- patent and trademark fees*
- communications*
- taxes*
- rent*
- insurance*
- interest*
- provision for bad debts
- market research
- credit checks
- translation costs
- product modification
- consultant fees
- freight forwarder fees
*These items will typically represent the cost of the total operation, so be sure to
prorate these to reflect only the cost of producing the goods for export.
5. Allow yourself a realistic price margin for unforeseen costs, unavoidable risks, and
simple mistakes that are common in any new undertaking.
6. Also allow yourself a realistic profit or mark-up.
Other Factors to Consider
Market Demand
Market Demand - As in the domestic market, product demand is the key to setting
prices in a foreign market. What will the market bear for a specific product or service?
What will the estimated consumer price for your product be in each foreign market? If your
prices seem out of line, try some simple product modifications to reduce the selling
price, such as simplification of technology or alteration of product size to conform to
local market norms. Also keep in mind that currency valuations alter the affordability of
goods. A good pricing strategy should accommodate fluctuations in currency.
Competition - As in the domestic market, few exporters are free to set prices
without carefully evaluating their competitor's pricing policies. The situation is further
complicated by the need to evaluate the competition's prices in each foreign market an
exporter intends to enter. In a foreign market that is serviced by many competitors, an
exporter may have little choice but to match the going price or even go below it to
establish a market share. If, however, the exporter's product or service is new to a
particular foreign market, it may be possible to set a higher price than normally charged
domestically.
