An Exporter? Who, Me?

by: NC

(NC)—If you're a small- to medium-sized business with a potential market for your product abroad, you may profit from making a move into exporting.

Your first reaction may be "Me, an exporter?" but it isn't as farfetched as you may think. Even if your company is relatively small, there may be a market for your product or service outside of Canada. In fact, 90 per cent of Canadian exporters have annual export sales of less than $1 million. What's important is having the right product or service, a commitment to succeed, and a sound strategy.

The best export strategies are built on the foundation of an up-to-date and comprehensive business plan. If yours isn't as current as it should be, you might consider refining it with the help of the resources offered by BusinessGateway.ca. Located at www.businessgateway.ca, this Web site provides lots of free tips, advice and tools, all related to starting, running and developing your business.

Take your business plan, for example. It should enable you to:

• identify the strengths and weaknesses of your company;

• establish your objectives and strategies, and analyse your company's performance with respect to them;

• determine your cash needs so you can approach banks and investors with confidence; and

• communicate your intentions to employees and investors.

If your plan falls short in any of these areas, check out the free, Interactive Business Planner, located in the Tools section of the site. It covers everything your plan will need, including:

• identifying the types of information required in your plan;

• locating information on basics such as marketing and costing; and

• preparing financial projections for your business.

Once you're satisfied with your business plan, you can return to the Tools section and use the Interactive Export Planner. It's similar to the Business Planner, but also covers issues such as:

• adapting your products or services to a foreign market;

• getting an overview of the targeted export market;

• creating a market entry strategy and an export implementation plan; and

• preparing financial plans related to the targeted export market.

And don't forget to use the Exporting link on the BusinessGateway.ca home page. It will point you to other essential sources of information that can help your company find business opportunities around the world. Once you take the leap, you may discover that export success is a lot closer than you ever imagined!

Raising Capital for Your Business – How Long Does it Take?

by: Dave Lavinsky

Most companies vastly underestimate the time commitment necessary to successfully complete a financing. In actuality, a company seeking financing needs to budget between 500 to 1000 work-hours to the capital-raising process, spread out over a 6-9 month time period.

The key processes in the capital-raising process include 1) perfecting the business plan, offering memorandum, and other company due diligence materials, 2) developing a comprehensive, targeted prospective investor list, 3) contacting this list and responding to investor due diligence requests, and 4) negotiating the transaction.

Completing the business plan typically requires at least 200 hours of work. This time is dedicated to conducting the market research to validate the opportunity, developing a comprehensive financial model, determining the most effective way to lay out the business strategy, and actually writing and proofing the business plan.

The next step, developing a comprehensive, targeted prospective investor list is also very time consuming. There are thousands of potential investors, each of which has very different tastes regarding the types of ventures that interest them. Some invest by market sector (e.g., healthcare vs. telecommunications), stage (seed stage vs. later stage), geography, or a combination of these. Many hours must be dedicated to determine which investors are the right fit for your venture. This process involves creating a master investor list, visiting each investor’s website to view investment criteria and past investments, and determining who is the right contact at the firm.

To see how easily the time adds up, consider that only about 25% of prospective investors who show an initial interest in a transaction actually progress to detailed company due diligence. Only about 10% of this 25% actually progress to a bonafide offer of funds, of which only 25% of these actually result in an investment transaction. So completing a financing transaction requires, on average, contacting approximately 160 pre-qualified prospective investors.

The due diligence process, where investors scrutinize the investment, can also be very time consuming for the company. Investors often request many documents, some of which can be easily retrieved from files (e.g., prior tax returns), while others may take more time to prepare (e.g., additional market analysis, customer lists with past purchases, contact information, etc.). Finally, negotiating a transaction can take a significant amount of time depending upon the complexity of the transaction and number of parties involved.

Too many companies fail to raise capital since they are unaware of the significant time requirements to do so. Those firms who understand these requirements and budget accordingly are the ones most likely to persevere and end up with the capital they need.