“Today, the bamboo bikes are sold as far away as the United States, Japan, Turkey, Germany, the United Kingdom, Netherlands, and Belgium.”
Logistical costs, packaging and potential tariffs are among the major barriers to international trade for small and medium-sized enterprises.
Even without the challenges associated with exportation, small business entrepreneurs are constantly juggling competing priorities, such as obtaining financing for continuous production, increasing sales and marketing domestically, and managing payroll on a shoestring budget. The drive to export tends to fall behind these other priorities.
Still, given the growing interconnectivity of global markets and robustness of Internet-enabled commerce, it has never been more convenient and profitable for small businesses to pursue growth opportunities abroad.
Take the inspiring case of Afrocentric Bamboo Bikes Ltd., the for-profit arm of Ghana Bamboo Bikes Initiative. When this organization first launched, its primary goal was to address the transportation needs of school children and farmers in Ghana’s rural areas. Then, gradually, as word spread through the Internet, particularly on social media, the company evolved from building high-quality handcrafted bamboo bike frames for only the local community to serving international export markets.
Today, the bamboo bikes are sold as far away as the United States, Japan, Turkey, Germany, the United Kingdom, Netherlands, and Belgium. Overseas purchases now account for about 80% of orders, according to a recent estimate.
The fresh fruit and produce sector is one area where Ghana can boast of several well-established exporters. Blue Skies, for example, ships its produce from Ghana, cut and packed locally, to major retailers around the world, including Waitrose in the United Kingdom. Another success story is Albe Farms, a pineapple grower with production facilities in Akuapim and Ga West districts. The company engages in direct export to giant distributors in Germany and Holland.
According to the Ghana Export Promotion Authority, an agency mandated to develop and promote Ghanaian exports, there are currently more than 3000 registered private sector exporting companies in the country.
Here are a few key points GEPA and other experts recommend to companies considering exporting.
Educate Yourself: You need to develop a firm understanding of international business practices. This may require conducting research to gain a solid understanding of best industry practices, quality standards, and tax regulations within the targeted export market.
Do Your Homework: Conduct a thorough analysis of the export market. This means researching the size and concentration of the specific product in the target export country, the market share held by competitors, and actual and projected consumption projections.
Know your buyer: Perform a credit history check on your buyer to establish whether or not they are willing and able to pay. Additional due diligence can be performed by seeking information from the buyer’s business associates and other suppliers.
Understand cultural norms: It is important to consider cultural norms and customs of the country you are exporting your products to. This may influence how you brand, label and package your product. For instance, in some countries, using certain colors is offensive; also, buyers in certain countries might also prefer labels in their local language.
Hire dedicated staff: Hire dedicated personnel to ensure proper recordkeeping, as well as dealing with shippers, agents, and distributors. Hiring a lawyer to prepare legal documents and to advise on compliance issues and appropriate procedures is crucial.
Team Up: Consider teaming with a local partner. It is always advantageous to have a partner on the ground that understand the local market and can help with developing relationships and negotiating deals.
Be Nimble: Be prepared to rearrange the way your business operates, should it be required, to become internationally competitive. This means setting aside funds to support product and market development. It is recommended that a business maintain enough funds to support export market development for at least 12 months without receiving returns.
Certification and Accreditation: Many countries require accreditation and certification for specific products, which can be time-consuming and costly. Understanding the effects of this process on your business and objectives is crucial.
Consider all the risks and potential pitfalls: Doing business in a foreign country exposes an organization to numerous commercial threats and liabilities, many of which can be mitigated with insurance and proper risk management. Some of the more common export risk involve running afoul of regulatory and compliance obligations. On the operational side, companies routinely run into issues such as theft, damage to goods and other supply chain mishaps.
Find a reputable logistics partner. Many international buyers have strict supply chain requirements so it is important to find a logistics partner with international capabilities that can meet those standards.
There are innumerable opportunities for SMEs of varying sizes in Ghana to grow their businesses through international trade, but the road to success requires commitment and resolve on the part of management.
At the same time, an SME that decides to venture into international trade must be nimble enough to change course when necessary, always alert to where and how the trade winds are blowing.
Remember: As economies evolve, trade evolves too.
Source: Fact Station || Premium Bank