Boards need to be designed, which could mean hiring a director in the target market, says Wayne Norrie.
What mistakes do SMEs make when they start exporting?
About 150 firms have gone through the Beachheads programme and they all tend to make the same mistakes.
Governance is one of the biggest. We see a lot of companies that have problems of poor governance or no governance. The best definition of governance is likening it to driving a car at night through the desert and there are lots of potholes but you can see only 50m ahead.
Most companies without governance plough into the potholes, whereas if they have good governance it provides them with the headlights to avoid trouble. Governance is not about someone being in the cab with one hand on the steering wheel - it should be about illuminating the way for the driver. It's about having the ability to look at a problem from 360 degrees. If you have the right people taking the company overseas, then you are more likely to be in good shape.
Many SMEs have board members who are in the role for historical reasons, who understand only their industry or their country.
I believe boards need to be designed. You need to know what you're looking for and go out and find it. If you have a target market, why not consider a director in that country?
What other potholes can SMEs fall into?
Companies do tend to see the world from the inside. We don't see our product or service from the eyes of an external market or consumer. We tend to operate a product push versus a market pull strategy.
We often don't understand why our customers buy our product or service and don't spend enough time understanding what's unique about our product. We also tend to be good at designing our product or service but not so good at designing our company to reach the desired market.
Just because someone likes the brand here doesn't mean the same drivers apply in different markets. What drives consumer behaviour? They really need to understand that and do market research. New Zealand Trade and Enterprise is very helpful at doing market research to assist with this.
What is something that exporting SMEs should know about market entry?
The go-to-market model is important. In New Zealand we sell directly because we are a small country but when you go to large markets it often pays to leverage existing relationships via an indirect channel.
And rather than going to distributors directly, it's a good idea to ask their customers, the retailers, who they like dealing with and who they would recommend. And when you do find a good party, no matter how good they are, you have to hold their hand during the first few sales cycles.
How do you show your export market that you are serious about them?
Commit. Often New Zealand companies are great back home because of an internal x-factor, because of the team, perhaps certain individuals inside the company.
What is seductive but dangerous is to hire locals in your chosen country and fly in and out once or twice a year. Companies have to commit, to relocate somebody senior from the New Zealand company with the x-factor so they can grow the overseas operation successfully. Flying in and out rarely works.
Wayne Norrie is chairman of New Zealand Trade and Enterprise's New Zealand Beachheads advisory board and a board member of the Hi Tech Association, Team BLM, Fronde, Maven and ASPEQ.