Exporting 101

Exports and imports consistently account for about two-thirds of the country’s GDP. As the liberalization of global commerce continues, more and more Canadian companies are joining the international market. 

Exporting 101 - Douglas Apr/May 2024
Photo By: Suphanat Khumsap.

Are you ready to expand your market across Canada, into the U.S. or even overseas? Here’s what you need to know to navigate the export maze. 

Why export?

Greater Victoria is home to an array of unique businesses large and small. The size of its market, however, is limited. By exporting out of B.C., you open your business to opportunities across Canada, into the U.S. and abroad, and become less dependent on one set of customers and fickle, local economic conditions. Exporting also allows you to make the most of free-trade agreements with other countries. The more diverse your market, the more competitive your company can become.

British Columbia also has an enviable connection with the rest of the world. It shares a border with the world’s largest consumer market, the United States. It has the shortest sea route between North America and Asia, and several world-class international ports and airports. And it has federal and provincial governments keen to support exporting with advice and funding.

But is exporting right for your business? The idea of growing your business beyond B.C. is enticing, but it can also seem daunting. 

First the pros:

  • Increased sales. If your domestic sales are healthy, exporting is a way to expand your market, find U.S. and foreign niche markets and take advantage of demand around the world.
  • Higher profits. If you can cover fixed costs mostly through domestic operations or other types of financing, your export profits can grow quickly.
  • Economies of scale. With a larger market, you can produce on a scale that may reduce your cost of goods.
  • Reduced vulnerability. By diversifying into international markets, you can avoid depending on a single customer base or suffering a domestic downturn.
  • New knowledge and experience. The global marketplace abounds with new ideas, innovations and marketing strategies that could also prove successful in Canada.
  • Competitiveness. If your company succeeds in the global marketplace, it will ensure your resilience to foreign competition in Canada.

Then the challenges:

  • Increased costs. You may have to modify your packaging, products or services, and account for short-term costs such as extra travel, new marketing materials and additional staff.
  • Level of commitment. It takes time, willingness, effort and resources to establish and maintain a presence in foreign markets.
  • Committing to the long haul. While exporting holds economic promise for most companies, months or even years can pass before you see a significant return on investment.
  • Local culture and regulations. Familiarize yourself with the differences in language, culture, business practices and rules, which can vary dramatically from market to market.
  • Paperwork. There’s no way around it — both Canadian and foreign governments require a lot of documentation from exporters of products and services.
  • Competition. You must be thoroughly familiar with the competition in your target market.
  • Transportation. Whether by land, sea or air, it’s important to factor in the related costs and paperwork of shipping your product from A to B.
  • Accessibility. You have to be easily available to your foreign clients and intermediaries.

Exporting goods versus exporting services

Exporting goods and exporting services present very different challenges. The former must deal with packaging, customs and physical delivery, while the latter confronts issues such as work permits, credentials, language and travel to and from the market. When exporting goods there’s often a service component that should be anticipated, such as installation, training and service.

Where do I start? 

Make a plan. Put simply, an export-ready business is one that has the capacity, resources and management to deliver a marketable product or service on a global scale at a competitive price. The trick is to determine whether this is true of your company, and if it isn’t, how to make it happen.

One myth is that a company may be too small to export. To succeed in international markets, you don’t have to be a big firm. Tens of thousands of Canadian small- and medium-size companies — those with sales of between $30,000 and $5 million — are exporting profitably.

“Exporting offers great opportunities for Canadian businesses, but you need a solid plan,” says Bill Macheras, a long-time Canadian trade commissioner. “Many business owners have no strategy and chase every lead. With a strategic approach, you can be proactive and improve your results.”

For help with this research, visits to target markets and finding partners, Macheras recommends contacting bilateral chambers of commerce, industry associations and government trade-promotion agencies.

Next, take a hard-eyed look at your business to make sure you’re ready to expand internationally. Do you have the capacity and resources to start exporting? You’ll need the financial wherewithal to make a long-term commitment to the venture. What is your capacity to expand your workforce, production and space to accommodate sales growth?

How will you stand out against the competition in a foreign market? Are you ready and able to adapt your offering to the needs and tastes of international customers? Just because something sells well in B.C.  doesn’t mean it will do so elsewhere. One example is the Ontario-based manufacturer that had to retool its entire production line to produce in metric to meet European Union requirements. 

A key piece to the puzzle is having local expertise and partners in the target market to help untangle the complexities of international business. “Canadian companies often underestimate things like the amount of documentation required to enter a foreign market,” says Macheras. “This is when it’s crucial to have a good local partner and, ideally, someone in your own company who can speak the language.”

Here’s a framework for the plan

Set clear goals. Decide on:

  •  Your business goals and sales targets.
  • The specific product or service to export.
  • The target market.
  • Action items, a timeline and your budget.

Research your market. Identify:

  •  Size of the market.
  • Competition.
  • Your unique value proposition.
  • Regulations, certifications, customs and other barriers and opportunities.

Choose your mode of entry:

  • Using a distributor or agent.
  • Acquiring or partnering with a local business.
  • Opening a physical presence.
  • Selling through online marketplaces.
  • Offering direct e-commerce sales.
  • Selling indirectly through another. company that exports to the target market.
  • A blend of the above.

Ask this hard question: Do you have the capacity and resources to start exporting? You need the financial wherewithal to make a long-term commitment to the venture. You should also think about your capacity to expand your workforce, production and support functions to accommodate expected sales growth.

Networking is an inexpensive way of assessing new markets and meeting potential buyers. Without the right connections, it’s difficult to establish a foothold. One way to research markets and buyers is by attending virtual or in-person trade shows. There are major trade fairs held around the world for virtually every business sector, from agricultural equipment to books.

Before deciding on which market to enter, determine whether your business would be a good fit. Gain insight on who your competitors are and the level of demand for your product. What is the profile of your average customer and the size of that market? This is where research and expert advice comes in.

Where to turn for help

Business owners may feel overwhelmed by the complexity of the export process, especially as a first-timer with no outside help. But both Canada and B.C. are keen to support businesses looking to export with expertise and financing. These government agencies have been tasked with helping businesses succeed at exporting, and the agencies often collaborate. They can provide advice on an array of topics like pinpointing target markets and managing risk, and can often back up that advice with grants or financing. All have offices in Victoria.
Says Cael Husband, trade commissioner at Global Affairs Canada: “We all work together, there is no wrong door to start the export journey.”

Export Navigator aims to make exporting as approachable as possible for both new and established businesses. Navigator is a free program that guides B.C.-based entrepreneurs through the export process by pairing them with an expert adviser who provides one-on-one support and knows the business landscape in each region of the province. There are even two advisers  dedicated to Indigenous-owned businesses. exportnavigator.ca

Export Development Canada is a Crown corporation dedicated to helping Canadian companies of all sizes succeed on the world stage. It offers trade knowledge, financial solutions, equity, insurance, risk management and global B2B connections. edc.ca

Canada’s Trade Commissioner Service helps businesses connect with funding and support programs, international opportunities and a network of trade commissioners in over 160 cities worldwide, including Victoria. tradecommissioner.gc.ca

TIP: An excellent first step on the export journey is to take the TCS’s free online quiz, to help determine if exporting is right for your business.

The Trade Accelerator Program is an innovative partnership between the EDC and the World Trade Centre Toronto, offering a training program of online workshops with industry experts. 

One past client, Brenda Bailey, was a tech CEO struggling to enter the huge Japanese market. “These programs helped me get my games into Japan.” She is now B.C.ʼs minister of jobs, economic development and innovation, where she oversees many of the same programs that gave her a boost.

Business Development Bank of Canada. For 75 years the BDC has supported small- and medium-size businesses in all industries and at every stage of growth with money and advice. Newer businesses can receive free advice and mentoring; more mature operations have a wider range of financing options, for everything from production equipment to commercial real estate.

So with eyes wide open, a solid plan and expert advice, you can profitably scale your business through exporting. As one successful exporter said, “The demand is out there. Canadian companies should be, too.” 

Success Story: DeeBee’s Organics

Mother and PhD medical scientist Dr. Dionne Laslo-Baker was in the kitchen with her two children when the idea for DeeBee’s Organics was born. One child wanted to make tea, but the other wanted to make frozen pops. That’s when her eldest said, “Mommy, let’s make teasicles!”

Exporting 101 - Douglas Apr/May 2024

Laslo-Baker quickly learned her kids weren’t the only ones with an appetite for their healthy and flavourful organic treats. Launching in 2013 with its first product, DeeBee’s TeaPops, in just two stores in Victoria, DeeBee’s now produces three organic frozen novelty lines and an organic, shelf-stable Freezie.

The company was entirely self-funded by the family, but as it began its meteoric expansion, it needed working capital to produce inventory, fulfill orders and export. The next logical step was to expand across Canada and into the United States. DeeBee’s turned to EDC, which worked with the company’s bank to find creative working capital solutions and help the business grow by exporting.

“EDC has provided us with invaluable advice,” says Laslo-Baker. “We have met so many people in the industry, and have relied on their incredible counsel. That has been a huge driver for the business.”

The products are now a staple in almost every major Canadian retailer, as well as many retailers in the U.S. DeeBee’s is in more than 20,000 retailers across North America, including Costco USA, Walmart and Loblaws. In 2020, the company also launched on Amazon and their own website.

The next step is going global. “We have had a lot of interest from foreign markets,” she says. “I’m looking forward to seeing how we can start some global conversations about food.”

Success Story: Industrial Plankton

Plankton are small organisms with a big role. They account for half of the photosynthesis on the planet, making them an important producer of oxygen. Plankton are also the foundation of the marine food chain, providing food for fish and shellfish, and indirectly for humans.

Exporting 101 - Douglas Apr/May 2024

Aquaculture around the world depends on plankton. Properly managed, plankton are very beneficial to aquaculture, from fish hatcheries to shellfish beds. But they can also proliferate out of control and have significant negative effects. Reliably producing enough healthy algae is the bottleneck for many operations.

To solve the problem of unreliable production and low quality, Victoria’s Industrial Plankton developed an automated system that creates a stable, biosecure culture environment, making it easier to produce enough algae to meet hatchery needs.

A modest profile in Hatchery International led to scores of inquiries from around the world, and the company’s export business was born. “Aquaculture is bigger overseas,” says Ashley Roulston, co-founder and CMO. “We had exhausted the Canadian market, so we looked abroad. We’re now in 33 countries, and exporting accounts for 90 per cent of our sales.”

Industrial Plankton worked equally with Export Navigator, EDC and the trade commission, and often attended meetings with all three. “Sometimes I had to remind myself who represented which!”

There were challenges at first, as equipment had to be modified for things like voltages and certifications. “Japan was particularly difficult. But now we can offer systems anywhere in the world.”

Success Story: Tofino Kombucha

For Kelsey Hendricks, brewing kombucha started as an experiment, grew into a hobby and is now a passion she wants to share with the world. Launched in 2017, Tofino Kombucha produces certified organic kombucha with a mission to become a gateway to better health and nutrition.

Exporting 101 - Douglas Apr/May 2024

Many businesses think of the U.S. and overseas as export targets, but other provinces provide opportunities, and a “walk before you run” approach to exporting.

Since beginning operations, Tofino Kombucha has doubled its sales and production capacity year-over-year. Now, the company’s vision is to conquer Canada. “It can be difficult to expand into new markets,” says Hendricks. “Labelling requirements, food-safety certifications and tax rates vary between provinces and countries.”

To push the company’s growth outside B.C., she turned to Export Navigator and began working with an adviser. “Navigator helped me open an online store that serves B.C. and Alberta. This increased my sales by $28,000,” says Hendricks. “The process helped guide my label design, obtain a Safe Food for Canadians licence and apply for grants to help me reach broader markets.” 

Readied with the necessary paperwork, Kelsey took the leap and started promoting Tofino Kombucha in other provinces. “By reaching outside markets, my brand awareness has increased, and Tofino Kombucha has caught the eye of new distributors who will significantly increase my sales and number of employees.”