Expert Insights on Market Research, Profitability & More

Lance:

I would assume that you have an export portfolio within that portfolio. What have you found to be the most surprising or interesting thing when going about exporting of your products? 

Breann:

So I would say that what we've noticed especially recently is the world is a lot smaller than it used to be. So trends and things that were very popular in the United States, you know, would take a long time for 'em to migrate over to other countries. And what we're seeing now is even products that will release, like, we'll get inquiries from other countries not long after they've been out, you know, thanks to social media and all of that. Everything gets out there a lot faster than it used to, which is great because it opens up a lot more opportunity and demand for your products in other countries sooner than, than later. Trends and things like that are moving around for us. We manufacture pet foods so that healthy feeding your pet healthy has definitely become more of a thing in other pets for the world. So it's a great opportunity to be able to move around much faster than, than we used to. 

Lance:

I said nimbleness is neat to get to market. Lynn, in terms of your consulting then, what, what do some of your clients find as one of the things that they never really anticipated? 'cause Exporting just sounds like, well, you make it and then you ship it and you get paid. And that is, I know it's much more complicated than that, but

Lynn:

You know, I think mainly they are probably most surprised at the regulations, maybe attached to importing their product into the other country. They weren't quite aware. As well as, you know, the level of research I think that needs to be done on entering a new market sometimes gets overlooked a bit. They, because they get an inquiry from a country that, you know, they're like, oh my gosh, this is great. And so they'll just go ahead and, and dive right in without doing some of that, that homework. With regard to the regulations and maybe some other business elements of doing business in that country where hopefully we can head that off a bit in, in terms of with the small business development centers and, and the resources we have to, to do research, that's where I end up helping them navigate some of that. But they are typically surprised at the regulatory aspect. On the other end is, is what I've been seeing.

Lance: So let's talk about labeling for a minute. When you're exporting other country, there's language issues. I don't wanna call 'em barriers, but there's language issues compliance issues, and using example beverages that are sold in California have to have the deposit label. The burden certainly falls on the importer to make sure that that happens, but a lot cheaper to put it on the bottle when you're making it than put a sticker on afterwards. So how burdensome in the, the food business Brianna, I'm sure you've got a labeling issues in addition to your ingredients. Yep. How does, how does that work with your products as they're being 

Breann: Exported? So yes, definitely that goes into all the research and everything that needs to be done ahead of time to make sure the last thing you want is for your product to show up in court and they look for that label and it's missing. That's a big problem. So yes, definitely doing all the research ahead of time and yes, you're exactly right. It is much easier to do that here. We have again been, when we were exporting to Europe, we had different consultants that were recommended to us through different agencies to help us with that, with the labeling they had. Usually using somebody that's in country we've found has been a huge benefit. They are used to doing it. They're there if they need to go get answers, they can obviously, just like the United States, think they're changing in all countries. So what works today may not work tomorrow. So having that person in country, we found was very beneficial because they could stay on top of all that. Then they would even connect us with people that could translate for us. We had to do some translations on some labels. They would do the full translation for us. We have 'em printed. It's real easy to put 'em on the bag before they left. So, yeah.

Lance: And just 

Breann: Hope. Yeah, we just rely on Google translate, don't do that, use, use somebody local. Absolutely.

Lance: We always have to talk about profitability that in order to take that risk there should be a commensurate reward in sending your products abroad and getting paid, obviously is the key one. But in terms of either your ROI or margins, you may not want to get specific. But do you, where do you incorporate the, the margin risk when you're sending products? Is it to grow the brand and you're willing to take a loss? Do you still wanna make it profitable or is it in fact more profitable to export your products than it is here domestically and, and, and only share information you feel comfortable with? Of course. 

Breann: Right. So I wish that there was a blanket answer that it was the same across the world and for every country. So I will say that in a lot of countries, they are willing to pay more of a premium for American made goods, which is great, especially on the food side, which is where we are. So that has been very helpful. One thing that I always recommend when people ask me about, you know, starting to look in exporting as well, is really go and look at what the products are selling for that are similar to yours in other countries. To see where your starting point is. 'cause You gotta back into it, right? We can't do anything, you know, as much as I would love to sell, you know, in some specific country, if, if we, the margins aren't there and it's not worth it, then we don't wanna spend all the time and money and effort to go there. 

Breann: So sometimes we're able to adjust our prices to accommodate, you know, all the additional expenditure that happens with export. And that's great, 'cause then we can still keep some higher margins. Sometimes, like you said we will take less on a product and make a little less just because it is such a large market. So volume wise, you can make some additional money there if you know, selling more products. So like I said, I wish that there was a blanket answer for both. But, you know, use using people like Lynn to help you do that research in the different markets, then you'll be able to set up your pricing structure to make sure that you still have the margins that you need. 

Lance: Good. So Lynn in, in terms of that, when you're advising we had one, and just a quick aside, we had one of our members when we had an EXIM staff at our board meeting and kind of asking, where are you guys exporting to? And one of our members, a smaller member, said, Kazakhstan. And the look on the face EXIM bank was like, Ooh, that's pretty risky. But, you know, is there, so as a consultant, when, when you're going to advise Lynn you know, how would you do that to say, you know, it's gonna be a bumpy ride. Let's take a look to see what your tolerance for that bumpy ride is, but still supporting, I would imagine exporting is a great business strategy for, for many, many folks. 

Lynn: Yes. So I always look at, at things and, you know, especially exporting is how do I mitigate the risk? Because no matter what you're doing, and you, you could pick the presumably the most secure market, right? So you, you can do low risk markets like Canada and Australia. There's always gonna be some level of risk, right? So how do you mitigate that? Number one is doing some research, and to Brianne's point is, what are products like yours selling for in the country? We can do some, some market research on our end. We have access to databases. We can track what imports are going into that country. We can, you know, track regulations and, and all of the things and utilize the US commercial service, their people on the ground. So there, there are lots of ways to get intel or market research on the product or service that you are intending to go into the market with. 

Lynn: But I wouldn't say I would ever sugarcoat anything. I want people to go into it with their eyes open and just say, lay, lay it all out, right? Like, here are the pros, here are the cons. Here are the recommendations. I mean, we're never one to tell people you have to do this. Obviously unless it's a US regulatory compliance situation. But it, it's really laying out the facts as we have them and letting that company make the decision. And then identifying the risks as much as we can] ahead of time. And then obviously the ways to mitigate them. But it's, there are no guarantees, right? Even in our current climate right now, right? Where tariffs are an issue, there's always going to be an issue. When I was exporting, it could be supply chain issues. It could be tariffs, you know, another time it could be consumer trends change constantly. So there's always gonna be a level of change, of uncertainty and a level of, of risk no matter what country you, you know, you choose. But I think approaching it from how do we mid, you know, identifying the risks and the opportunities, and then how do we mitigate? 

Lance: Yeah. It seems like the last five years we've been in a global reset of the economy and not really aware prior to COVID, but we lived in a just in time global economy. Mm-Hmm. That really relied upon, I don't wanna say necessarily fast movement, but consistent movement in and out. Because inventory could be the, the bane of, you know, any company's right. Disruptions of COVID and the recovery post COVID and now the uncertainty of, of tariffs and where we had and we're in a cooling off period it seems at the moment. But you know, it goes both ways, right? Tariffs are not a one way street. So trying to manage that while make decisions that are five to 10 years down the road Brianna sure you're going to, you wake up one more, hey, it's great. And then, you know, tomorrow 

Breann: Uh-huh. Yep!

Lance: Best in time. Nature of things has really I think that's both the strength and the fragility of our kind of economy that we've come to know that have had two inventory in every warehouse. We wouldn't even be having this conversation. But we don't. So how we adapt to that is always interesting.

Lance: When you're thinking about which countries to export to and I guess I would say you wouldn't export air conditioners to Antarctica, you have to know your customer base and, you know, how do, how do you, how do you do that data? Where does the data exist in addition to the consultancies like Lin provides, but I'm sure there's target countries and there are non-target countries. What's the process in in picking that out, Breann? 

Breann: Well, you know, a lot we, like I said earlier, we get people that actually reach out to us from other countries, which is amazing. So, I mean, you know, if we get some of that, then we'll, that will trigger us maybe to start to do some research on it. You know, the internet is a wealth of knowledge as well, but, you know, not to go back to, but expert services, SBDC, things like that, we, they will do amazing, amazing reports and give you full details of, for us, we're looking at, you know, how many dogs and cats are there out there you know, what's the pet ownership per household? Things like that. They will give us full reports back on that and let us know, you know, yes, this is, this is a solid inquiry, or maybe we need to move on from that one. But it, I think it's the government agencies that most companies don't realize exist. You know, they try to do a lot of this work on their own. We did it when we first started but once we realized that there was all of those opportunities out there to help us, it made a world of difference. And so we would come in with strong knowledge and strong data to make the decisions that we were gonna make. 

Lance: For example, say France is really a hot country right now for wanting American imports. Is that, is something that, that you would do as well? Or you just work with the company and, and really find their business plan? I would would assume there's a matching system that makes it all work. 

Lynn: It it depends on, on the company. So first and foremost, it's based on their products and, and where they wanna go. The reports that we pull, so the small business development centers the services that they provide are no cost to the clients. But those databases that we have, we can, you know, to Brianne's point, look at how many households have pets and, and if there are hot markets within that industry sector, we certainly let the client know about it. Like, Hey, you know, what you were looking at I'll use Australia again. You were looking at Australia and New Zealand, but did you know that pet ownership is extremely high in Japan? Or something of that nature? So looking at the trends, but it, it all stems around the product the company's product or service and their goals, right? 

Lynn: And then we take a look at what, you know, we, we can plug in that information and really look at where, where makes sense, right? Where in the world are the products going? Who's importing what, and, and getting some of that country or market knowledge with regard to in this case you know, if it's pet ownership how much do people spend on pets and what do they look for? Do do organic ingredients matter? Do so all of the things that would really, I, I think, make the decision easier for that company to expand to another market. So it, it's several factors. But we certainly don't discount a country just, you know, based on well, they're pretty far, or, or maybe it's my, you you brought up Kazakhstan before. I'm like, yeah, you, nobody ever thinks of that. But you know, certainly you don't wanna rule countries out for sure. 

Lance: Yeah, that's a good transition to Paul then. So I would imagine that you have exporting Port Bank has good history with many countries, some challenging history with others. Is there a, a tier structure of countries that XM would identify and kind of open for business universally, or, Hey, this country's [00:04:30] great for importing acts, but another country is better at product Y and here here's how we can help at the, at the bank, but here's how you guys assess countries as well. 

Paul: Sure, absolutely. Well lemme kind of start off by saying you can have a good buyer in a bad market. You can have a bad buyer in a good market, right? So we do publish on our website is updated semi-annually. What we call our country limitation schedule is basically, you know, kind of the hierarchy, if you will, of which countries were open for business, which countries were not, or if there's any level of restriction. We may be wide open in a Mexico, we may be open with some restrictions in some other markets. We do have a pricing structure available for the public to see on, you know, where a Argentina if might fall versus an Australia versus an ab bergon things like that. So you can kind of get a good idea of what the relative risk is. 

Paul: As far as product category, we're a little bit more reactionary, so we don't really advise companies what product would be best in a particular market. You know, that's for our friends at the SBDC and the Department of Commerce were already mentioned. So, you know, we're kind of much more that risk mitigation side of the equation. We were talking about Canada a little bit earlier to draw upon my comment kind of starting off, you know, you can have a bad buyer in a good market. It's always surprising to me on the number of claims that we get out of even good markets like Canada. People may not necessarily do the same due diligence in a, in a Canada versus a Cameroon, right? Or they'll watch the receivables much more closely in a China versus Canada. So you know having a risk mitigation tool like export credit insurance is, in my opinion, a very important tool to look in your overall toolbox. 

Paul: I mean, let's face it insurance is, if you will, a necessary evil. As a business owner, you have insurance on everything, right? You know, the, the, your machinery, the plant key man in policies, you name it. A lot of times I talk to companies and if they're extending credit terms to their buyers, say, say, oh, yeah, yeah, I'm not worried about my Canada, I'm not worried about my Germany. I've been to, you know, the wedding of the, you know, the, the sons and daughters of that. It's like, okay, hey, cool, great, but you know, if you're extending credit that is an uninsured portion of your balance sheet, why not ensure that it's pretty nominal? I mean, that's cash, right? But if you don't get paid, you don't have recourse through that. Again, unless you know self servingly here, you're ensuring that receivable with EXIM or one of our private sector counterparts. That was probably a very verbose way to answer your question. So thank you for the time.

Lance: What are, what are some of the advantages that you see with exporting in addition to growing your markets? I mean, that, I'll, I'll start, it won't give you that one, but, what is brand for the, for exporting? 

Breann: So definitely the global impact. I mean, you know, as, as I'm gonna give you the entrepreneur side of it, right? Is that all businesses, we have that passion for why we do what we do, and we have that goal for our company. And, and for, you know, for us it's, it's contributing to the health of the pets. And so the advantages of exporting is being able to spread that mission across, you know, around the world and not just domestically in our country. So being able to, you know, go beyond our borders and feed pets, you know, around the world is a great advantage. It's also, you know, obviously, like you said, there's additional markets out there so to, you know, get your brand out there and get some additional revenue. So what we've also been able to do at times is if there's stayed tough times here, there's other markets that are not experiencing the same thing as us, so that we're able to work on that, or even countries that we've exported to for a while. If someone of them is having a hard time, you know, we can pivot and push our efforts over somewhere else. In the meantime, while, you know, things are leveling out wherever we were before.

Lance: And in terms of exporting, what, what's that one thing that keeps you awake at night? 

Breann: Just like what Lynn said, it's all the regulations and things. I mean, it's like you said with the beard, like just making sure you can leave and you're like, we got it all. We got it all covered, everything, you know, all, all the t's across and the i's are dotted, but even in transit, is there something that can happen when it arrives in country and things like that. So really, really, really doing your due diligence prior to shipping your product and opening up that relationship or investing the money into the expert program is really making sure that you've used all the amazing resources like the SBDC and expert services and things like that to help you make sure that you can try and eliminate as many of those barriers to entry as possible. 

Lance: Great. And, and Paul, since you're at the EXIM Bank and you're helping US manufacturers export, what, what are those things that, that you use kind of on your calling card to encourage perhaps companies to really look at an international market if they had not been previously? What, what's the thing that really attracts them 

Paul: Well thank you very much, and as we have all probably heard the majority of buyers are outside the United States. Something along the tune of 95% of the world's consumers are outside of the United States. So you know, depending upon the company's a product kind of missing an opportunity if you're not really looking at exporting actively. You've asked the question a little bit earlier, what keeps companies up at night? I'll be the first to say, cash is king. If you can get cash before you release product. Hey, do that all day long, twice on Sunday. You know, if you're not losing sales there's nothing that I have that's better than that. But the corollary to that is, can you sell more by offering your buyers at least partial credit terms? What is your buyer's distribution channels look like? 

Paul: Are you selling straight to consumers? Are you selling to a distributor? Can that distributor sell more to their customers? If it's a retail chain, what's your customer's stocking options? You know, can they, if you get more product on their shelves by offering partial terms well, what happens if they don't pay you? That's kind of where EXIM Bank comes into play. As I mentioned a little bit earlier, if your buyer doesn't pay you the US government will, it's basically boils down to a simple insurance policy where you pass the price of financing or the insurance along to your overseas buyer. We typically covered 90, 95% of your invoice value. It's just a tool, another tool in your toolbox to help you sell more American product in an overseas market, and again, develop those international sales. 

Lynn: Yeah, and I'll add to that. And to Paul's point exactly, you know, what and what keeps you up at night? When I was exporting, getting paid was probably the number one thing. We did a lot of business on letters of credit because we manufactured machinery. They were very high capital, high expenditure for the buyer. And there were some tough times where we did not get paid right away. It was slow because either we didn't have a letter of credit or we had extended credit to the buyer, which was great. But this was before we discovered EXIM Bank. And I now caution my clients that, look, if you want to be more competitive, that's great. If you're going to extend credit, you absolutely need to ensure your receivables. And so that's one of the non-negotiables that when exporting a company should have, if they're gonna go ahead and, and extend credit for sure.

Lance: Breann, what are you gonna do tomorrow to promote exporting your products? The the first thing you're gonna do tomorrow to do that? 

Breann: Let's see. Definitely like I said, I mean, I hate to continue to go back for it, but you know, as we've built the relationships that we've built with the different agencies and things that are available to us, it's that knowledge that comes in that helps us to be able to make decisions to go and focus on where we need to focus. So kind of getting that out of the way and using that information, then it allows us to be able to go out and, you know, God bless social media at this point. We view there's social media everywhere. So as far as the marketing, we can use that information to help us market where we need to market. So we definitely building upon that as well. 

Lance: And that's tomorrow's to-do list for you, Lynn. What are you gonna do? 

Lynn: Always work with the clients that are new to export. I do have a couple of meetings scheduled and honestly, it's, it's to help take a look internally. I think companies forget this. It's like doing an assessment on their internal business. So are they operationally ready and financially to export and help them get export ready? 

Lance: Very good. What will you do tomorrow? Well, kinda like Lynn, I've got a morning call with a dairy exporter talking about a, if they got some receivables in Mexico and in Canada. I mentioned Canada a second ago, right? And almost people consider that a domestic sale, but you never know the risk. A couple of other calls. A one with a skincare company that is looking to expand their international sales and another with a trading company. So you know, my day is, is of generally filled  in trying to help companies manage their international risk and help companies make more money. That's a good, I think it's good to attend on it that day. 

Breann: You guys, you guys are amazing, so thank you.