Bay businesses have become more exposed to global markets since the economic gut-punch of Covid-19 forced many local companies online.

But local entrepreneurs are being warned not to risk “what you can’t afford to lose” by mortgaging the family home or losing sight of their humble beginnings when going global.

Tauranga Chamber of Commerce chief executive Matt Cowley said the pandemic had encouraged more local businesses to trade online, making them more accessible to international customers.

There were various models of global business, he said.

“Some are based here and ship products to overseas customers from New Zealand.

“Others have overseas-based partners who distribute locally on their behalf, or maybe they have established themselves overseas with their own employees.”

Cowley said successful New Zealand businesses were great at finding niches often overlooked by larger players.

“Although the niche might be small in a global context, they are often large in a New Zealand context.”

The biggest impact Covid had on exporters was their ability to travel overseas and return to New Zealand efficiently, he said.

“There are also the unpredictable supply chain disruptions and expensive shipping costs to navigate.”

Cowley’s advice to local businesses entering the global market was to ask for help.

“Each country, even regions within some countries, can have different laws and ways of doing business.

“There is a range of government programmes to help exporters become prepared before they start, as well as support for those who have established themselves overseas.”

Business Mentors New Zealand Ltd chief executive Sarah Trotman said the company had been supporting entrepreneurs taking their businesses offshore for 30 years.

But Trotman said underestimating the investment of time and money needed for a successful offshore venture was a key concern for business mentors.

Getting the right balance between preparing the documentation, finding a buyer or business partner and ensuring quality relationships with exporters were also concerns, she said.

“For example, taking a franchise into Australia requires huge investment in a lawyer who knows Australia’s stringent franchise laws well.

“Mentors often see a lack of investment in taking time to understand the culture of the proposed market.”

Trotman said the right time to go global was when a solid, well-resourced plan was in place that can be well executed by quality people and partners and included worst-case scenarios.

But business owners need to be careful of taking their eyes off their local company when establishing a new market abroad, she said.

“This can include the business owner being in their offshore market for long periods of time.

“Business owners will often mortgage the family home to fund the expansion into an offshore market, this can be risky. Don’t risk what you can’t afford to lose.”

Trotman said business owners should consider a legal structure that was separate from the business.

“This can be helpful when sharing equity with an inshore partner, it keeps them separate from the local business.”

Rotorua Business Chamber chief executive Bryce Heard said it was difficult for companies in New Zealand to become internationalised.

Heard said it was hard for Kiwi businesses to grow from a domestic base into the international market because there was no size of scale to the domestic market.

“So you have to leapfrog from a standing start straight into the international market. It’s hard enough to start a domestic business, but it is much harder to start an international one.

“But we do have some successes.”

That included recent category winners of the 2021 Tompkins Wake Rotorua Business Awards Salt + Tonic and Hayes International.

“They have both made that step and done it very successfully.”

Western Bay of Plenty economic development agency Priority One chief executive Nigel Tutt said the Western Bay was home to a strong export sector.

“This ranges from manufacturers to food companies to software, and from niche exporters taking on the world to established global players like Zespri and Comvita.”

Tutt said closed borders certainly don’t help businesses build face-to-face relationships but the pandemic has helped local businesses, either through market factors or levelling the playing field virtually.

“From an economic perspective, we’re grateful for our many, high-value exporters and we expect to see this sector grow in the future.”

Top tips for going global

• Research the prospective market, including partners and distributors well.
• Connect with New Zealand Trade and Enterprise for support and onshore advice.
• Join Export New Zealand and take time to get to know the embassy based in New Zealand and the New Zealand embassy in the offshore market.
• Take time to be confident it is the right decision.

Source: Business Mentors New Zealand Limited

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