It’s easy to feel hesitant about exporting given the impacts of COVID-19 and the rising tides of economic protectionism. But diversifying your markets remains one of the best ways to make your business resilient and ready to grow.
Canadian companies that build a multinational presence through trade and diversification are more profitable, more stable and more resilient than companies that don’t. The access to talent and innovation they gain in building that footprint better positions them to compete in the future.
While it might be tempting to delay your expansion plans indefinitely and focus on the domestic market, staying home comes with risks of its own. Canada is a small portion of the global market. Additionally, firms from other countries with growth plans of their own will happily compete for Canadian customers here.
Practical steps to diversifying your markets
One of the keys to making inroads into new markets is to ensure your value proposition is clear for your prospective customers and that you are tuned to their specific needs. If you’re entering a new market, it’s essential to get to know it. If you’re already exporting, get to know your customers’ concerns and how you help them succeed.
It’s also wise to explore technology that can make you more resilient as you expand. For consumer products, that might mean creating an online storefront. For manufacturers, it could be forming closer links with suppliers or adding warehouse automation. And keeping in touch with your customers and suppliers today requires more remote capability. These steps will position you to succeed in what is quickly becoming the “new normal.”
At the same time, you want to protect yourself financially. Take a hard look at your balance sheet to make sure you have the capital to operate in a new market. You can use credit insurance to cover your cash flow in case your new customers run into financial difficulty.
Another safeguarding step is to evaluate your supply chain. Could you continue to deliver to new customers if future disruptions occur? Many companies are moving away from a global “just in time” supply chain model that maximizes efficiency toward a regional model that allows for contingencies and puts critical steps and suppliers closer to their customers for this very reason.
When assessing new suppliers, it’s essential to ask them about their financial stability — and their own suppliers — to avoid surprises. At the start of the pandemic, some companies faced sudden and unexpected shortages because they weren’t aware their suppliers’ suppliers were based in China, where factories were among the first to be impacted by the pandemic. Knowing this background would have helped them plan better.
If there’s one lesson COVID-19 has driven home, it’s “expect the unexpected.” Make a list of the things you think couldn’t possibly happen, then build contingency plans for how you’ll deal with them if they do.
Resources and support from EDC
Helping Canadian companies diversify is at the core of our mission. In light of COVID-19, we’ve expanded our support to even more Canadian companies, regardless of size, sector or region. Hundreds have preserved their cash flows with our Business Credit Availability Program (BCAP), available through financial institutions. Many customers new to EDC are using our Credit Insurance to protect themselves against the risk that customers may not be able to pay.
Successful diversification can take years to achieve. Even if you’re not ready to start now, it’s still valuable to start thinking about it so you can be better prepared when you fully recover. EDC can provide you the capital you need to expand, whether it’s working capital or patient capital to grow into new markets.
The more Canada exports, the better off we all are. Wherever you are in your trade and diversification plans, we continue to take on risk so you can take on the world. I invite you to visit our online COVID-19 business resource centre to learn how.