Guide to Entrepreneurship


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Guide to Entrepreneurship

  1. 1. ENTREPENEURSHIP 101 AND EXPORT 101 TRAINEE GUIDEPRESENTED BY 2020 DEVELOPMENT COMPANY LLCCONTENTSINTRODUCTIONAfter completing this course, the participants will be able to: • Analyze current business practices • List the skills necessary to be a successful entrepreneur and export manager • Identify solutions to business strains caused by entering the export business • Identify corporate strengths and competitive advantages • Identify the niche for their product in the local and global market • Define risk and determine their acceptable level of risk acceptance • Debate the qualities of various customer relationships • Develop a company and product profile document • List the benefits of using Incoterms • Understand payment term options and terminology • Understand basic price strategies • Understand basic tradeshow strategy and ways to achieve success through tradeshowsHow to use this guideThis Trainee Guide has been provided to you to fulfill two purposes. First, you will use theGuide during training to take notes, complete exercises, and follow along with the trainer.Second, after training is completed, this Guide will serve as a reference for you to use whenapplying the principles taught in this course. Global Shea Association Entrepreneurship and Export Trainee Guide 1
  2. 2. Because of this dual purpose, it is very important that you write in your Trainee Guide whenyou take notes or complete an exercise. Some of the graphics have been adapted for thePowerPoint presentation so the figures in your book may not perfectly match thepresentation. You might want to take notes on the graphics to remind you of key points.This is your reference document, and you will want to be able to recall your thoughts andideas when you return to the job.Special instructions: During this course, you will be exposed to a variety of skills andbehaviors related to export management. This introductory course should be used as astarting point to understanding the operations of international trade. When you havequestions that are beyond the scope of this course, or you need clarification, please seek outassistance from the organization or individual who can best answer your questions. Theauthor of this course can be reached at to help clarify questions youmay have. He will attempt to answer you as quickly as possible.MODULE #1 – ENTREPRENEURSHIP 101 WORKSHOPLesson 1 –What is an Entrepreneur and what skills do they possess?Objective: After discussing the keys to successful entrepreneurship, the participants willevaluate their individual and company’s internal strengths and weaknesses affecting theirability to succeed in business and specifically in the export business. The participant mustidentify adjustments needed to succeed as an exporter.Enabling Objectives: Prior to completing the lesson objective, you will be able to:• Identify the principles entrepreneurship• Assess your skills using tools provided• Understand the 10 keys to success• Determine “what business” they should be inMODULE #2 – EXPORT 101Lesson 2 –Export 101Objective: After discussing the keys to successful exporting, the participants will evaluatetheir company’s internal strengths and weaknesses affecting their ability to export. Theparticipant must identify adjustments needed to succeed as an exporter.Enabling Objectives: Prior to completing the lesson objective, you will be able to:Global Shea Association Entrepreneurship and Export Trainee Guide
  3. 3. • Identify the principles of international trade • Assess your personnel • Select the “right” products for export • Analyze your products to identify the niche for their export efforts • Analyze your risk and determine their acceptance level • Understand various trade relationship options for the export marketEnd of Course AssignmentsMARKETS documentComplete the attached MARKETS documentAppendix 1 of this Handbook is the 2020DC MARKETS document which is a review ofyour company this document provides you and the supporting agencies with a clear pictureof your organization, its strengths, challenges and opportunities. It also provides a blueprintfor action to enter the export markets.Complete a company and product profile for yourcompanyUtilize the skills taught in this course coupled with the MARKETS document to produce acompany and product profile that can be utilized to market your company and its products.MODULE #1 – ENTREPRENEURSHIP 101 WORKSHOPDiscussion #1: What is an Entrepreneur? A person who organizes, operates, and assumes the risk for a business venture. Naturally a risk taker and visionary Entrepreneurs play a key role in any economy. These are the people who have the skills and initiative necessary to take good new ideas to market and make the right decisions to make the idea profitable. The reward for the risks taken is the potential economic profits the entrepreneur could earn. ( An Entrepreneur is the individual most likely to survivor in a developing economy. Global Shea Association Entrepreneurship and Export Trainee Guide 3
  4. 4. Discussion #2: Examples and discussion on local EntrepreneursIn the space below please provide notes on local entrepreneurs from your own experienceand the discussion of the group.Discussion #3: limitations and hurdles for local entrepreneurs to overcomeIn the space below place your notes from the discussion of the local environment forentrepreneur success.Discussion # 4: Key words used to define EntrepreneurIn the space below write your own list and the group list of key words that describe anentrepreneur:What characteristics does an entrepreneur possess? 1. Examine needs, wants, and problems to determine what they can do to can improve the way these needs and wants are met and problems overcome. 2. Narrows the possible opportunities to the one offering the greatest potential for returns for their efforts and investment taking into consideration their resources and skills. 3. Timing is critical to the execution of the idea and meeting the needs of a changing market. First to market has the highest risk but also with success the highest returns. 4. Research the opportunity and how the needs, wants and problems are being met currently and what is on the horizon.Global Shea Association Entrepreneurship and Export Trainee Guide
  5. 5. 5. Enlist sources of advice and assistance including the support of your family and employees. Also looks to government programs or other forms of assistance to capitalize on available support programs. 6. Plan the ventures and consider various scenarios of success and problems. 7. Rates and understands the risks and the probability of possible rewards. Know what could go wrong before it happens and takes action to minimize the impact of problems. 8. Evaluate the various scenarios of possible risk and possible rewards and develop a strategy to act or not to act based upon adequate knowledge of the options. 9. Never hang on to an idea beyond its usefulness. Be flexible to market conditions and improvements in knowledge. 10. Employ the adequate resources for the venture to succeed. 11. Understand their business and the commitment it will take in order to achieve success. 12. Reaches their goals and continually adjust them to achieve higher plateaus and levels of success as they define it.Survival ModeIn many economies individuals are forced to become “Entrepreneurs” due to lack ofemployment outside of their own efforts. Everyone who owns a store, sells something onthe streets or provides a service to others is in their own way an entrepreneur.When in “Survival Mode” most individuals become entrepreneurs out of necessity. Theydepend upon their own skills to survive; they take calculated risks and naturally gravitate towhat they can do to survive.To survive in business people need tools to survive. The balance of this course will providesome of these tools.Identify the principles of Marketing and SuccessHere are the top 10 most important things you should know to be successful in marketing:1. Communication is key – You must respond to a customer’s inquiry immediately. Even if you don’t know the answer to their question, or you don’t think they will like the answer, you need to respond in a timely manner. It is better to communicate too much Global Shea Association Entrepreneurship and Export Trainee Guide 5
  6. 6. than not enough. Tell the customer more than you think they need to know. The customer should select the information they want, rather than wish they had more.2. Honesty is essential – Like every situation in life, honesty is a key to success. For instance, if you are going to be late on a shipment, or deliver an inferior quality product in comparison with your last shipment, tell your customer honestly. Give them all of the details and let them make the decisions. It is best you alert your customer about bad news rather than wait for them to find out later when the shipment arrives.3. A consistent quality is key – Your product and product grade/description must be consistent. If you are manufacturing a product, each unit should be identical to the last, each shipment identical to the last. If you are selling an agricultural product or other raw material, your description should be constant. If you grade a product, every time you ship that product under that grade it should be identical in characteristics to the last time you shipped that product under that grade. If there are no official standards, develop your own, provide them to your customer, and grade your product consistently.4. Risk assessment – Know your ability to accept risk and stay within your bounds. Understand how much risk you are willing to accept and no matter how much you want the sale, do not go beyond your ability to absorb a loss. Know how to protect yourself from excess risk.5. Know your Markets – Become a student of your markets. Know the customers, the customs, the culture, the duties, and the competition. Know what the customer does with your product, how it is used, how it is sold, and why it is bought.6. Details, Details, Details – Pay attention to the details. Without attention to detail your business will ultimately fail. You must keep track of the details!7. Product Advantages – Be ready to answer the question “why should I buy your product?” The customer has dozens, or even hundreds, of alternatives to buying your product. Be prepared to explain why a customer should buy your product rather than any other.8. Customer relationships – Consider your customers as your partners. They really are your most valuable allies. They must make a profit to continue working with your products. Help them make a profit by providing them what they want, when they want it. By doing this, your customer will continue to work with you even when times are difficult.9. Networking – Network at all levels of the trade cycle. Build relationships on a business and personal level with customers, suppliers, bankers, forwarders, freight companies, andGlobal Shea Association Entrepreneurship and Export Trainee Guide
  7. 7. everyone in between. You never know, someone you may consider of no importance today may end up as your most important ally tomorrow.10. Excellent product visibility – If the customer doesn’t know you have the product or doesn’t see the quality first hand, they will not buy your product. Therefore, be prepared to send out samples...lots of samples. This is a major expense for which you need to plan. Unseen products remain unsold.C - CommunicationsH - HonestyA - A consistent qualityR - RiskM - MarketsD- DetailsA - AdvantagesN - NetworkC - Customer relationsE - Excellent visibilityExercise 1.1 – Analyze Current Business PracticesDirections: Consider numbers 1-10 above and assess your current business practices todetermine if you are ready to do business internationally. Rank your performance in eacharea on a scale of 1-10 (one is best). For the bottom four finishers, identify how yourbusiness could improve performance in those areas. Table 1.1 – Current Business Practices Rank Current Practices Identify Areas For Improvement 1. Communications 2. Honesty 3. Consistent Quality 4. Product Visibility 5. Market Knowledge 6. Product Knowledge 7. Risk Assessment 8. Customer Relationships 9. Networking 10. Attention to DetailExercise – Internal Strengths and Weaknesses Global Shea Association Entrepreneurship and Export Trainee Guide 7
  8. 8. Directions: Now that you have reviewed your organization’s personnel and resources it istime to put them into a “T” chart to graphically illustrate these competencies. To do this,take a piece of paper and draw a big “T” starting at the top of the page. On one side of the“T” write “Strengths” and on the other side write “Weaknesses”. Next begin to list issues,items, and people by writing them into the appropriate column. Table 1.2c shows anexample of a “T” chart. Table 1.2c – “T” Chart Strengths Weaknesses Products – consistent quality, strong Experience demand Domestic market – shared resources Domestic market – profitable sales Grading needs to be established Individual with key skills Time away from office International travel experience Need to strengthen staff Good relationship with government agencies Need to improve relationship with bank Desire and willingness to learn Need to improve product visibilityTake your completed “T” chart back to work and review it with the appropriate individualsin your organization. Organize discussions with them about how you can build upon yourstrengths and down play your weaknesses. For each weakness, write a statement about howyou will keep the weakness from hindering your success as an exporter.Post the “T” chart some place where you will see it regularly, like on your bathroom mirror,by your copy machine, or by your door. You want to remind yourself and other appropriateindividuals to review it on a regular basis. By understanding these weaknesses you will beforced to address them and find solutions to them. This will help to ensure your businesssucceeds.This is an important exercise which may seem like an extra effort. However, if you do itbefore you begin to export; it will help you avoid surprises once you are in the middle ofyour export program. If you consider your organization’s weaknesses you are in a betterposition to build your export business than if you simply concentrate on your strengths.Use the chart below as a starting place for your own “T” chart for yourself, yourorganization and your products.Global Shea Association Entrepreneurship and Export Trainee Guide
  9. 9. What business am I in?Objective: Through the thought process of this section the student will understand theimportance of reviewing their business from a different perspective. Often time’s businessesget tied up with the concept of what they do rather than what they can do more profitably.Companies must learn to produce what they can sell rather than sell what they produce.Consider production optionIf you are a painter, are you better served by producing one picture which takes a year toproduce, or by producing cheaper pictures every day? Where do you maximize your profits?An artist can paint a landscape which sells for $30,000; however, it takes him 52 weeks toproduce. He has an opportunity to paint houses, and though painting houses does not takeadvantage of his greatest talents, it would net $1000 per week, or $52,000 per year! Underthis scenario, he is financially better off painting houses than painting landscapes. However,if he could sell his landscapes for $60,000 each, or produce them in half the time, he wouldbe better off painting landscapes.Consider opportunity cost. Opportunity cost is defined as the most favorable forgonealternative. To analyze opportunity cost, you need to look at what you are producing andcompare it to some other product you could produce with the same resources. Which ismore profitable? Global Shea Association Entrepreneurship and Export Trainee Guide 9
  10. 10. For example, your company currently uses its resources to produce faucets generating a 3%yearly return. However, these same resources can produce doorknobs generating an 8%return. The 8 % forgone profit would be your opportunity costs or alternative costs. Inorder to provide you with the greatest returns on your resources you need to know whatother opportunities for returns exist.Financial returns are not the only “returns” to be considered in either the marginal cost oropportunity cost analysis. You should also consider non-cash benefits and costs associatedwith a decision. For example, if the artist were able to paint the landscape from his homestudio and spend time with his family, he might choose to make less money than he wouldpainting houses away from his family. This will depend upon what “value” he places onspending time with his family or other non-cash benefits or costs. Only individuals candetermine non-cash values for themselves, therefore, this analysis needs to be done internallyrather than someone on the outside telling you how to run your business and your life.Where are your Competitive Advantages?Objective: Given factors to consider when choosing an export product, the participants willrate their product and market knowledge to determine areas for improvement.Determine which product your company has a core competency producingNow that you understand your business’s strengths, weaknesses, and ability to accept risk,you can take a closer look at your products and determine what market niche you want tocapture as your primary market. It is important to identify and pursue a niche because nocompany has the resources to pursue an untargeted market. To know what market to goafter you must first identify which of your products is going to have the greatest potential forsuccess.Identify your products. This starts with an internal review of the products you could export.This review would include an analysis of your production to ensure that you have a sufficientsurplus of product available for export. One of the most discouraging things for a sales-focused organization is to have more sales than product available to sell. Therefore, if youare going to develop a market you want to make sure that you have a reasonable ability tosupply that market with product. It is always best if the product has both a domestic andinternational market, as situations change and you want to keep your avenues open byhaving a product with multiple opportunities to sell. You will want to strike a balancebetween your domestic and international sales. Will you have sufficient capacity, personnel,raw materials, and capital to handle a larger volume?You may wish to consider that the highest profit products are those with a limited supplyand high demand. Therefore, selling a product which is difficult to produce yet has aGlobal Shea Association Entrepreneurship and Export Trainee Guide
  11. 11. significant demand can be more profitable than selling a product which is easy to producewith even a strong demand. Figure X.X shows an example of this.Consider your marketing abilities. Determine if your organization is going to have thegreatest advantage by marketing a lot of a product with high supply and high demand or alittle volume with limited supply and limited demand, but with a higher profit margin.Companies have succeeded with both scenarios, and you must determine which is best foryour organization.Determine if there is international demand for your productNow that you have completed an internal review of your organization you are ready to lookbeyond your company and country to determine if there is an export market for the productwhich you are most capable of producing and marketing profitably.Determining if there is international demand for your product will require research into themarketplace. The more time you spend researching the more you will learn about themarket. Research should not only be conducted before you begin exporting, but rather on aregular basis. There are a number of e-newsletters and trading centers for which you canregister and receive regular updates. You should find an industry association in your targetmarkets and join or simply get their membership list. These members will be some of yourtarget customers.What you are looking to learn by conducting research and interviews is what the marketdemands and what is currently being supplied. Spend some time learning what yourcompetitors are doing, however, do not make this your obsession. Do what you do best andyour competitors will end up worrying about what you are doing, not the other way around!Determine if you can be competitive in the export marketThere are three basic assets applied to the production of any product – land, labor, andcapital. (Land can be defined as any material input or raw material.)In which of these areas do you have a comparative advantage? Are your raw materialscheaper than your competitors? Is your labor rate lower or more productive than yourcompetitors? Do you have access to capital? What is the cost of your funds versus yourcompetitors? “Cost of funds” includes the opportunity costs of using your own funds fromyour domestic or other operations. Global Shea Association Entrepreneurship and Export Trainee Guide 11
  12. 12. MODULE #2 – EXPORT 101Discuss your current business practicesAssess your personnelIn smaller organizations individuals need to wear many hats. One employee is expected toperform a variety of duties and responsibilities. However, even if you are your onlyemployee, knowing the skills necessary to succeed in the export market will help you identifywhere you need to strengthen your business or seek outside assistance. Later in the coursewe will discuss where and how you can strengthen your company’s personnel through theuse of local and international agencies including local NGOs (Non-GovernmentalOrganizations).Profile of a Successful Export ManagerDirections: In small groups of three to five people, list questions you should ask yourselfwhen selecting an export manager. What characteristics would you look for? What kind ofperson should s/he be? What kind of experience should s/he have? Table 1.2a – Profile of a Successful Export Manager 1. Does this person have international work experience? 2. Do they have sufficient product knowledge? 3. 4. 5. 6. 7.Identify adverse business effects of entering the export marketThe export business is going to require significant time and resources to build. You mustfully consider the effects of entering the export business and how it impacts your otherbusiness activities.What Could Go Wrong?Directions: Consider everything involved in entering the export business. What resourceswould be strained? What relationships would become vital? In small groups, you will havefive minutes to list every factor that might affect your success as an exporter. Record youranswers in Table 1.2b. Then each group will share their answers with the class and receiveone point for each unique answer that no other group considered.Global Shea Association Entrepreneurship and Export Trainee Guide
  13. 13. Get Ready to Export!Select your productLearn the basics of market research for selection of the “right” product for market.What Should You Export?Given factors to consider when choosing an export product, the participants will rate theirproduct and market knowledge to determine areas for improvement.Exercise – Rate Your Readiness!Table 4.1 – Rate Your ReadinessIf you wish to increase your production toserve the export market, will you have: You have interviewed: Sufficient capacity? Banks Personnel? Steamship lines Raw materials? Airlines Capital? Embassies and consulatesConsidering the export market, your product: Government agencies Is properly packaged You have competitive: Has consistently acceptable quality Cost of funds Can be competitively priced Labor pricesYou have done market research by: Raw materials cost Reviewing export statistics Reviewing import statistics Using the internet Visiting foreign markets Visiting tradeshows in your target marketIdentify a niche for your productNiche - A position particularly well suited to the person/product who occupies it;“Ethiopian white honey found a good niche in the premium honey market of Asia"In the space below brainstorm about ideas to provide your product a special niche in themarket:Why in the world would the buyer buy from you over everyone else?What factors determine if a buyer purchases a product at the importer level?What about the distributor level? Global Shea Association Entrepreneurship and Export Trainee Guide 13
  14. 14. What determines if an end consumer purchases your product?Risk analysisAccept risks associated with export business start-upBefore you enter any business activity you should understand the risks associated with thatactivity and your limits on accepting this risk. Exporting need not be expensive. It is possibleto operate an export business on a limited budget. We will learn ways to do this during theExport 102 section of this course. It is important to set clear, attainable, measurable, andexecutable objectives before diving into the business. A key to success is making sure thatyou establish a realistic budget to achieve your exporting objectives, and continually monitorand adjust the budget and goals to reflect current events and developments.How will you finance your export business?First, build a budget for your export promotion activities. Figure out how much you canafford to invest and your expected timeline for cost recovery. In many situations the exportmarkets are similar to the search for El Dorado, the legendary City of Gold. In order tosearch for El Dorado you need to have income, or available resources, to pay for the search.In most companies it is domestic profits that are used to build the export business. Youeither need domestic profits to cover the investment in the export business, or you need areserve of cash from which you can draw upon as you “invest” in the export business.Therefore, before you begin pursuing the export business, spend time determining howmuch money you can draw off of your domestic business or where the additional capital isgoing to come from. Do not wait until you have committed other resources to the exportbusiness before you determine where the funds are going to come from.What is the worst-case scenario?You must consider the worst possible scenario when assessing your risk. This is the waythat the banks look at your business. If you can think like a bank, without emotional ties tothe business, and limit your risk, you will succeed in having a long term business.Figure X illustrates that there are risks and costs associated with every venture. Even if thecost is just your time, it is a cost to your business because of your distracted focus andefforts.The Importance of Customer RelationshipsAfter establishing a customer relationship, the participants will list the benefits of usingIncoterms in customer agreements.Global Shea Association Entrepreneurship and Export Trainee Guide
  15. 15. Choose a customer relationshipThere are several manners in which you can deal with your customer. It is important thatyou and your customer understand the relationship at the very beginning so that you don’tget yourself into a bind later.Open Market Customer – This is a customer with whom you work on a non-exclusivebasis. In this situation you would sell to this customer and any other customer in the marketwith whom you are able to meet agreeable terms of a sale. This is often the best way tohandle sales of commodities, where price is the primary factor in making the sale. Under thisscenario you and your customer have the right to buy from, and sell to, whomever you wantat any time. The disadvantage is that there are few loyalties with this type of relationship. Ifyour competitor has a lower price then you next time, they will get the sale.Market Development Customer – This is a customer with whom you are working todevelop a specific market. Unlike the Open Market Customer, you are in a more long-termrelationship with this customer. Market development relationships are, by definition, long-term, mutually beneficial, and cooperative. Together with this customer you will work toachieve mutual success; however you have not given up all other customers or opportunitiesto work with them. This type of relationship could progress to an exclusive relationshipover time.Market or Product Exclusive Relationship – This is a customer who will be your“exclusive” representative for their market. A Market or Product Exclusive Relationship(MPER) gives the customer limited rights to market your products. These limitations can begeographic, niche, brand, or time oriented.Often times this agreement begins as no more than a handshake or e-mail communicationand understanding. As it moves to more formal terms it is best to have an attorney familiarwith both markets and laws to draft a relationship agreement. It is helpful when enteringthis form of relationship that you clearly state to your customer what your intentions are andthat they understand what you are trying to accomplish. This can be done in a letter andneed not involve an attorney.By giving a customer a MPER right to a specific geographic area you are free to work inother areas where other customers may be better positioned. By limiting the MPERrepresentative to a niche you are allowing them to market to their specific target niche andtherefore take advantage of their core competencies.For example, if you are offering fresh fish to a market you may find that one importer doesan excellent business with restaurants, while another sells to grocery stores, while yet anothersells to processors. With an MPER you play to the customer’s strengths. An MPER is one of Global Shea Association Entrepreneurship and Export Trainee Guide 15
  16. 16. the best ways of keeping your avenues open, while benefiting from the advantages of anexclusive relationship.Exclusive Agent – This is a customer that you have given all rights to market your productor brand in a specific market. It differs from an MPER, in that it is a legally bindingagreement which should include performance clauses for both you and your customer. Itmay be limited by the factors listed in Figure X.X. This is the most restrictive type ofrelationship for both you and your customer, however, if it is the right relationship it can bethe most rewarding. In an exclusive agent agreement you truly need to consider yourcustomer as your partner. An exclusive agent is going to be more willing to invest resourcesinto promoting your brand, and by so doing, will promote both parties’ future. They willinvest in promoting the brand and/or your company, knowing that in so doing they arepromoting their future as well.One way to work with an exclusive agreement, while keeping your doors open for otheropportunities, is to give your customer “exclusive rights” to one brand. Then, if you findanother customer in the market, you can simply develop another brand. It is important thatboth customers understand each other’s rights and objectives. If you have two agents in thesame market they must each know their role, rights and responsibilities.“As long as you buy everything I produce, you have an exclusive.” This is a simplephilosophy which works well for many agricultural and natural products. If your target salesin give a market are 20 units a month, and a customer is willing and able to purchase thatamount on the condition that they have an exclusive, then you have nothing to lose byproviding them with exclusive rights. If a customer can achieve your goals and expectationsin a market, there is no need to look for another customer.Care must be taken to make sure that both sides fully understand what is expected fromthem in exchange for this agreement. An exclusive agreement should not be entered intowithout the consultation of an attorney in the country where the product is to be marketed.It is recommended that you not utilize the same attorney as your customer, to get an outsideopinion on the rights, responsibilities, and enforcement of the agreement. Customers almostalways prefer to work as Excusive Agents. The agreements should always include aperformance clause which allows you to move on if things do not reach your objectives.Lay the foundation for a long-lasting customer relationshipThe internal review is done, the product is defined, and the research into the markets iscomplete. Now we can work on identifying and securing a customer.There are several layers and potential methods for working with a customer. In all of themethods the 8th rule of international trade, maintaining customer relationships, is pivotal.Consider your customers as your partner. Your customer is your partner even if it is just forGlobal Shea Association Entrepreneurship and Export Trainee Guide
  17. 17. a single transaction; you must treat them as a partner. In a good partnership, like in a goodmarriage, both parties benefit from the relationship. The father of modern capitalism andeconomics, Adam Smith, presented the concept that a seller sells the product because he canget more value for his goods than it is worth to him, while a buyer purchases the productbecause its value to him is greater than he is paying for it. In this manner both parties win!This rule holds as true today as it did in 1775 when it was made popular by Adam Smith inWealth of a Nation. If you treat your customer as your partner, and create win-wintransactions, then they will end up your friends. And as much as you can influence eachother’s success, the friendship and business will grow together.In order for this relationship to work it must be a two-way street. Your customer must alsotreat you as a partner. This is best achieved through developing trust and a fullunderstanding of each other’s’ business. International trade is like a card game with you andyour customer playing on the same team. To make the best hand between you, both of youmust lay your cards on the table in full view of each other in order to build the best hand.You can take the first step towards building a successful business relationship by puttingyour cards on the table.Develop a company and product profile documentUnseen is unsold! If the customer doesn’t know what you have for sale they can’t buy it.Therefore you need to promote your product and the development of a company andproduct profile.Utilize the MARKETS document in the appendix of this document as a starting point forgathering the information necessary to produce a company and product profile document.Standardize the documents for each product so that the customers can clearly compare thedifferent products, grades or packages.It is important that the customer have confidence in the company producing the product thefact sheet helps them gain this confidence. It is important to provide an outline of thecompany’s technical abilities and resources. It is important to provide backgroundinformation on the company owners.The product specification sheet should contain a minimum of the following:Contact InformationCommon and Scientific NamesIngredientsPackaging SpecificationsSpecial CertificationsShipping conditions Global Shea Association Entrepreneurship and Export Trainee Guide 17
  18. 18. International Chamber of Commerce Terms (INCOTERMS)Define international commercial terminologyIn international trade it is important that you “speak the same language as your customer”.This does not require that you speak their native tongue, but rather that you utilize the sameterminology for the sale and know its correct definition.To avoid errors in execution you need to make sure that you fully understand theinternational terms you are using and use them correctly. Mistakes can be very costly.Intercom 2010 are internationally accepted commercial terms defining the respective roles ofthe buyer and seller in the arrangement of transportation and other responsibilities. Theyalso clarify when the transfer of merchandise ownership occurs. Incoterms are incorporatedinto sales agreements or other methods of sales transactions. Listed below are some of themost important Incoterms. If you run into a term which you do not understand, please takethe time to contact your bank, an NGO, or others who would be able to explain thedefinitions of Incoterms. Risk of utilizing the wrong terminology can cost you your business,therefore, be sure to fully understand the Incoterms before you use them. • EXW - Ex Works -- Title and risk pass to buyer including payment of all transportation and insurance cost from the sellers door. Used for any mode of transportation. • FCA - Free Carrier -- Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyers collecting vehicle; it is the Buyers obligation to receive the Sellers arriving vehicle unloaded. • FAS - Free Alongside Ship --Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller. • FOB - Free On Board -- Risk passes to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller. Used for sea or inland waterway transportation.Global Shea Association Entrepreneurship and Export Trainee Guide
  19. 19. • CFR - Cost and Freight -- Title, risk and insurance cost pass to buyer when delivered on board the ship by seller who pays the transportation cost to the destination port. Used for sea or inland waterway transportation. • CIF - Cost, Insurance, and Freight -- Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation. • DDU - Delivered Duty Unpaid -- Title, risk and responsibility of import clearance pass to buyer when seller delivers goods to named destination point. Used for any mode of transportation. Buyer is obligated for import clearance. • DDP - Delivered Duty Paid -- Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. Used for any mode of transportation.After establishing a customer relationship, the participants will list the benefits of usingIncoterms in customer agreements.Benefits of “Speaking the Same Language”List the benefits of using Incoterms. Table 5.2 – Benefits of Incoterms 1. 2. 3. 4. 5. Global Shea Association Entrepreneurship and Export Trainee Guide 19
  20. 20. Global Shea Association Entrepreneurship and Export Trainee Guide
  21. 21. Target your customer baseIn marketing, you can use several different methods to “target” a customer.Broad Marketing is like a fisherman throwing out a net in the barren sea and hoping to catcha fish or two. It can work, however it is often very expensive and time consuming. Tomarket using this strategy you would advertise to the public by placing ads in magazines andtrade journals before you have a distributor or customer. This method is often used by largecompanies. However, this strategy is typically more effective for building brand recognitionthan for attracting key customers.Target Marketing combines knowledge collected through market research and interviews toefficiently steer your business into the most profitable market. The more specific you are intargeting your customer the more economical your marketing efforts are going to be interms of time and resources. This method assumes that you have made the right conclusionsbased on thorough market research. You will already have a “target” customer in mind, ifyou have taken the necessary steps prior to target marketing: a) reviewing your business b) reviewing your products c) researching the markets d) understanding the rules of international tradeBefore you begin target marketing, you should know the answers to the following questions: • Who are the end users? • Where are the end users getting my product? • Who are the distributors? • Who is supplying the distributors with product? In other words, who are my competitors?The more you know about the market, the better you will be at serving your customers’needs. Global Shea Association Entrepreneurship and Export Trainee Guide 21
  22. 22. 2020 Development Company LLC 13811 217th PL NE Woodinville, WA. 98077 U.S.A“Tomorrow’s results start today through actions with 2020DC” ™ Wednesday, March 06, 2013 Market Access Research Keys for Export Trade Support This document is designed to provide 2020DC and our affiliates with the information necessary for our clients to succeed in expanding their business with specific focus on assisting in marketing efforts. The more complete this information is the easier it is for us to help you develop customers and achieve your sales objectives. This information will be utilized to 1) help us identify your needs and design a program to help you meet your sales objectives and 2) develop a profile for your company for presentation to potential customers, partners and others critical to your business. This some of this information will be utilized for presentations outside of 2020DC and therefore if you want to keep this information confidential beyond our relationship please indicate accordingly as instructed below. 2020DC TRACKING INFORMATION Interviewer’s name: Phone number: e-mail: Interview date: Consultant: Jorge Machado Global Shea Association Entrepreneurship and Export Trainee Guide
  23. 23. Product(s) to be marketed:Where are the products currently marketed? General Company InformationCompany receiving assistance:Year established:Legal structure of company: Corporation LLC Government entity NGO Sole Proprietor Partnership OtherPrimary Shareholders:Shareholder background:Website:Webmaster: Company Work Force Number of People Allocatedabbreviation Area or Department According to Functions PD Product Development PM Product Management S Sales Mkt Marketing Fin Financial Plan Planning Acc Accounting PE Production Engineering Prod Production Sup Supply Global Shea Association Entrepreneurship and Export Trainee Guide 23
  24. 24. Marketing department contactsMarketing personnel contact:Email address: Phone:Export contact: Phonee-mail address Marketing MaterialsDoes the company have a brochure?If yes attach a copy. Is it available digitally?Brief history of company:Please describe the company’s general strengthsand capacity, especially related to exporting:Please describe the company’s generalweaknesses especially related to exporting:Export experience history:List export customers and concentration:Global Shea Association Entrepreneurship and Export Trainee Guide
  25. 25. Has the company had an export agent or customer in the past? Yes NoIf yes, please describe experience, countries of activity and current status:Percentage of the business expected to be export in the next 12 months:Has the company attended the following export courses: Export 101 Export 102Export 103 Tradeshow 101 Other, courses describe:Tag line or mission statement for the company:Company and product certifications: HACCP FSC MSC ISO 14001 SA8000 FairTrade ISO 9000OtherIf “Other”, please specify: Does the company have one or more brands? If yes, please list them. If not do you have plans to develop one or more brandsWhat market segment does your company fulfill with greater efficiency? Wholesalers,distributors, small Does the company market via its own shops, franchises, catalogues, internet,famous brands and etc. Company Information – FinancialWho is the company’s bank:Primary contact at bank:Banker contact information e-mail phone:Does the company have immediate financialneeds which could impact their marketingopportunities and ability to grow sales? Global Shea Association Entrepreneurship and Export Trainee Guide 25
  26. 26. What forms of payment are acceptable for their Letter of credit Documents againstexport sales? payment Open terms Wire transfer Partial or full payment in advanceDoes the company have export sales financingavailable?Does the company have a complete Business Does the company have a one, five and tenPlan? years goals and plans? If yes please describe them Company related product informationProduct(s) to be marketed:Does the company have a product specificationdocument? (Attach copy)…is it availabledigitally?Is company prepared to distribute product samples? Yes NoIf “no” please explain when they will:Do target customers exist: Yes NoIf “yes” please detail:What countries does the processor believe are target markets? Why?Is company prepared to visit target markets in the next 12 months? Yes NoIf “no” please explain why:Is company prepared to participate in a tradeshow in the next 12 months? Yes NoPlease describe company strengths and capacity regarding this particular product (i.e. access toraw materials, machinery and technology, patents/trademarks, brand names, etc):Global Shea Association Entrepreneurship and Export Trainee Guide
  27. 27. Please describe the production process for this product:(attach chart – digitally if possible)What percentage of plant or production line capacity is the company running?Please describe the company’s limitations and challenges regarding the production/marketing ofthis particular product:Does the company have methods to analyze its Does the companies prepares a technical formproducts costs in relation to its productions describing all data/costs to produce a productlevels? More products less costs?Please list all your machinery and equipment: Modeling and cutting how are they done? Global Shea Association Entrepreneurship and Export Trainee Guide 27
  28. 28. Requested Services InformationHas a scope of work been prepared for this market development effort? Please attach if so.Please indicate tasks to be addressed and level of effort expected. Assist in product development Assist in package design and development Assist in securing raw materials Source equipment Perform market research Prepare company profile sheet Prepare product specification sheet Visit the plant and review objectives and production Assistance in finding, suggesting and performing training Partnerships and cooperation with technical schools Participate in tradeshow Market the product Bring buyers to production facilities Bring sellers to buyers Represent manufacturer in markets Find investors for businessStrategy of the project and Commitments of the ClientStrategy of intervention of the project with the client:Commitments of the project and their relation to the priority problems(Rank the three principal commitments)a)b)c)Commitments of the Client in relation to the action of the Projecta)b)c)Global Shea Association Entrepreneurship and Export Trainee Guide
  29. 29. Timetable of sales and investments (minimum for 1 year)Concept Most Projected Sales and Investment (S/.) Recent Trimester 1 Trimester 2 Trimester 3 Trimester 4 Total Trimester (indicate months)SalesInvestment________________________ _________________________Signature of Project facilitator Signature of ClientName NameTitle TitleDate Date Global Shea Association Entrepreneurship and Export Trainee Guide 29