When compared to U.S. SME’s at 33 percent, German firms at 20 percent and Chinese small and medium sized firms at 60 percent, it is pretty clear that Canadian firms have not caught on to the opportunities that are available from exporting.

It is also why we buy Chinese laptops, Japanese robots, South Korean smart phones and Taiwanese computer parts. In return, we sell pork bellies, oil and natural gas and raw logs. This is hardly a model for a 21st century economy.

Rethinking the entire approach to exporting

Much has been written about the causes underlying our utter lack of international activity, from an unwillingness to take any kind of risk, to cost concerns, to a lack of qualified international trade professionals and managers, and a general lack of market knowledge.

How difficult can it be to do an environmental scan of a country with potential on Google?

Then there’s the old worn out excuse of little or no government support.

These may be legitimate but in the end they are excuses. We need to fundamentally rethink how we encourage and develop the capability of Canadian SME’s to actively pursue international markets.

Let’s start from the top down.

1. There is a need for a national organization, perhaps based on the Saskatchewan STEP or Australia’s Austrade models, that works closely with SME’s in both training them to become export capable, and identifying customers in export markets.

2. No more government trade missions where the focus is on politicians. Trade missions should be business to business driven, with matchmaking and follow up incorporated in each mission.

The National Research Council used to undertake these in Asian markets and they were hugely successful.

3. Let’s start talking in the media and industry associations, and chambers of commerce, and from governments at the Federal and Provincial level about realistic markets. India and China are not realistic markets for most SME’s unless they operate in very specific niche markets.

Canadian firms need to know more about where real opportunities and real customers are.

There is a need to promote Latin and South America, East and West Europe, and the small strong markets in Asia such as Singapore, South Korea and Taiwan.

What can SME’s do?

4. Understand that we live in a competitive global world and learn about it. In a recent survey, over 75 percent of Canadians had not heard of the Trans Pacific Partnership (TPP), a trade deal that, if implemented, will fundamentally change the Canadian economy.

5. Be prepared to spend money and time gaining the necessary knowledge and training on international activities such as Incoterms, letters of credit, and freight forwarders. It’s not rocket science and it should be a part of every SME’s activity.

6. Understand the value of the impact of social media on your international marketing potential. While Canadians have the highest use of the internet on a per capita basis among OECD countries, less than 15 percent of Canadian retail firms have simple e-commerce capabilities.

It’s not that difficult to set up a PayPal account, and in twenty minutes you can identify a segment of real customers using LinkedIn – I have seen it done.

7. Understand it is not about markets; it is about reaching real customers. It doesn’t matter which country(s) you choose to sell in (except for China and India) but it does matter if they have customers.

Ask your colleagues and your networks where they sell to in the world, why they have been successful, and what lessons they have learned.

In my little corner of the world, Victoria, British Columbia, there are dozens of SME’s that sell globally and they are more than willing to share their lessons with other local firms looking to expand internationally.

Why this matters

In the next twelve to eighteen months Canada will be a signatory to two major trade agreements that will impact the domestic competitive scene.

The first is the Canada EU Free Trade Agreement. This is not like NAFTA or just a reduction in tariffs. This agreement is far reaching in areas such as foreign investment, government procurement and intellectual property.

The second is the Trans Pacific Partnership. Much of what constitutes this agreement has not been made public yet, but according to reports it will cover procurement, foreign investment, labour mobility, environmental standards and business practices.

The TPP has twelve countries at the table and Canada is not in a strong bargaining position. So, it is important that Canadian SME’s be aware of its impending implementation and what its impacts might be.

The current Canadian government is committed to trade agreements and opening up the Canadian market. The world is about to march in the door, so perhaps we should go and visit them first.

A bit of practical advice

Succeeding internationally is not that difficult if you are prepared to spend the time and resources to find real customers. A few hints in that pursuit:

8. Pick on someone your own size. Don’t go after customers in large, complicated, non-transparent markets. Choose countries that have SME’s that want to work with you.

9. Pick country(s) that have growth potential and a need for your product or service. Don’t know where to find them? Try Google.

10. Partner up. You will need agents or distributors or local partners. Find the good ones and cherish them. They will save you time, money and headaches.

11. Get competitive. Figure out what makes you the best at what you do and build on that. By the way, it’s not because you are a Canadian company. No one cares. They do care about product quality, after sales service, good communications and strong supply chains.

12. Budget for market development. Nothing is free and international markets can take time to develop.

13. Commit to staying for the long term. Good customers are hard to find, and once found are worth the effort.

Your thoughts on what Canadian SME’s need to do to play a bigger role in exports?

Before you head off into the wild blue yonder of some exotic potential markets you need to ask some key questions.

1. Should you be in that international market?

In answering this question you need to evaluate the real market-opportunities which require you to undertake detailed market research for your product or service. You also need to figure out the key factors that will determine your success.

These could be increased sales, new partnerships, new suppliers or any host of things.

You also must identify who your key competitors are. These are not likely to be the same competitors you face in your own country.

Finally, you have to determine if your 4Ps of marketing (price, place, promotion and product) fit within the business context of the new international market.

2. What is your market entry strategy?

Once you have decided on the international market(s) you want to enter you have to figure out what is the most appropriate market entry strategy for your company.

Will it be to simply set up a distribution or agency agreement? Will you partner or joint venture with a company or make a direct investment and purchase a company in the market.

Each new market will have its pros and cons. The trick is to plan, plan, plan and then implement.

3. How will culture affect your global business?

You also need to know what cultural differences will impact your business.

Culture plays an integral role in all business relationships. You have to understand how this works in the market you are going to enter.

4. Have you considered all the costs of international marketing?

International marketing costs money and you should be prepared and budget for expenses that you do not normally incur domestically. These include at a minimum travel and business development expenses.

Your market analysis should identify your best customers.

It is easier to pick the ‘low hanging fruit’ than go after customers that will take a great deal of effort to bring on board.

Finally, you have to identify your staffing needs. Do you have people on board, or access to, people who understand how the market works and can ease your entry.

5.  Do you have all the documents and processes in place?

You have made the commitment to enter an international market and try your well planned luck. Do you have all the proper forms and documents for company registration and have you got all the appropriate government approvals that will allow you to do business in the country?

You will need to ensure you have a foreign exchange process in place to repatriate profits and you will need to talk with your bank or a government agency such as Export Development Canada (EDC) about financing and payment insurance.

Additional checklist for new market entry

Competition in the global market is intense and widespread. You will need to bring something different or innovative to the market that allows you to compete and beat your competition. It also requires some common sense. Here are a few business tips to help you in your thinking:

1. Be very selective in the markets you want to enter. It is better to succeed in one or two markets than fail in many.
2. Find a partner in the local market. You will be amazed at how much easier it is to succeed with local market knowledge and an established network.
3. Learn about the local business culture, country and politics. If you know the rules of the game you can play. Always remember that the way business is conducted in other countries is not same as in Canada.
4. It is always easier to sell in your own country than to sell internationally. Understand this will always be the case and be prepared.
5. No matter how well you think you understand the country and its culture there will always be something you miss. Listen and learn from your local partner.
6. Make an effort to build and develop local networks. This is time consuming and can be expensive but it is worth every minute and every dime.

What other questions do you think are important to ask before you test out new markets? Share your comments below!