If
you’ve been following Canadian financial news lately, you’ll appreciate that
the loonie has been slumping against the greenback. In mid-July, our currency
fell to 77 cents U.S., its lowest level since 2009. A number of factors are
contributing to this decline, but perhaps the most important is long-term
weakness in certain commodities, especially crude oil.
Canada’s
economy relies on the extraction of raw materials more than most others in the
industrialized world. A slump in commodity prices diminishes the incentive for
investment in those sectors from abroad, reducing demand for our currency. The
sluggishness of the loonie also explains why we’ve seen a small pick-up in
inflation across the country since June, even though Canada is in an economic
downturn, the price of oil is still relatively low, and the Harper government
has promised to balance its budget despite the slump (all of which tend to put
a damper on inflation). A low loonie means that the price of imports into our
country, including many food products and manufactures, has risen.
But
as you may have inferred from the title of this post, there is good news too:
namely, the returns on our exports will also tend to rise, since those exports
will become less expensive (and thus more attractive) to foreign customers.
Tourism and associated industries may also see fringe benefits, as the prospect
of a Canadian vacation becomes more affordable to foreign travelers. In other words, a low
loonie translates into business opportunities abroad. If you haven’t done so
already, now is a great time to concentrate on online marketing and
distribution to foreign markets, particularly the U.S., China, Brazil, Germany,
and Australia.
As with
any new market, do your homework first.
Is
there a demand for your product or service, or an unfulfilled need that you can
help to satisfy? Are prospective customers with disposable income willing to
shell out for whatever you have to offer? What do you bring to the table that
incumbent firms do not?
Before
you embark on a venture into overseas markets, you should be able to answer
these questions definitively. Getting there simply requires due diligence.
Start with some research on the internet, and identify organizations that can
help you glean insight into the target market, including government data on
income levels and spending habits. Aim to picture your typical client in the
target market, the environment in which s/he lives and works, the amount of
free time s/he has, and the recreational activities s/he enjoys.
Connect
with foreign customers online.
Although
overseas branches are nice to have, they’re also a luxury that most small and
medium-sized firms don’t enjoy. This is where a robust online presence,
including a website accessible in multiple languages, comes in handy. If you
don’t have the budget to invest in a sleek, sophisticated website, there’s also
a variety of existing online gateways—including eBay and other auction
sites—that allow you to 1) broaden your international reach on a budget and 2)
dip your toe into the waters of your target market before your dive in.
As
the internet increasingly evolves from a stationary, plugged-in medium to a
mobile, wireless one, more and more industries are prioritizing compatibility
with mobile devices in their website design strategy. You’d be well advised to
follow suit as you strive to reach foreign customers.
Choose
distributors and payment processors wisely.
Select
the most reputable, reliable distributor and most secure international payments
system you can find. (Favour dependability even if the price is slightly
higher, and investigate the record of candidate distributors and payments
processors well in advance.) If customers know they can count on these aspects
of your business, they’ll keep coming back, and recommend your company to their
friends and associates. But if something goes wrong, even if a subcontractor is
to blame, your business’ reputation could be in jeopardy.
For
more on how you can take advantage of a feeble loonie, see this piece in the Globe and Mail’s business section by
e-commerce expert Cameron Schmidt.
