Tourism in Australia is booming, providing many opportunities for small business exporters. One company that is paving the future of tourist attractions is NSW-based company Laservision, which provides multimedia entertainment attractions for governments and blue chip companies.
It is a great example of a business that has overcome challenges on its export journey by facing up to perennial export challenges, notably in finance.
With 95% of Laservision’s business now coming from exports, the company’s journey provides useful learnings for other small business owners in the arts and recreation sector which are trying to break into overseas markets.
Understand the requirements for global expansion and know your financial options
One of the most common problems for small businesses is funding export growth, with many businesses needing support to enable them to fulfill export contracts. Laservision was used to getting deposits and getting paid in advance for certain services. But in the Middle East, the client wanted Laservision to finance the entire project itself and be reimbursed later. This was a major difficulty because the project was worth A$60 million and Laservision did not have that amount of capital available.
In partnership with Laservision’s private sector bank, Efic helped to create a multi-option finance package that allowed Laservision to secure a contract in the Middle East.
The Export Working Capital Guarantee allowed Laservision’s bank to approve the finance needed to cover the upfront production costs of the project. That support has set the business up for success in the future.
According to Laservision CEO Paul McCloskey, “Demand for our services continue to outstrip our ability to provide them. It’s great to be invited to the best parties in the world and get paid for it.”
Consider your competition
Just because you have a great product or service does not mean customers in another market will prefer your product over a competitor’s. Assessing the size of the market and the competition you are likely to face is important. The environment may be a prohibitive factor at worst, and at best will influence how you market and position your product.
McCloskey highlights the importance of product differentiation for potential exporters.
“I believe a portion of our success is differentiation. There are very few competitors that can replicate or operate the attractions we’ve developed,” said Mr McCloskey.
Identify how cultural factors may impact your business
According to McCloskey, a failure in recognising and understanding cultural factors can cause multiple issues if you’re not prepared.
It’s important to consider whether there are any language, religious, cultural or market factors you need to be aware of before entering a new market. The Middle East, for instance, has cultural nuances that differ greatly to Australia. Ignoring these differences can be detrimental when it comes to business negotiation or dealing with customers.
For example, pushing too hard for a meeting at a specific time in the Middle East may not be well received, and negotiations are often likely to take a lot longer than we are used to in Western business culture.
Understand the regulations and compliance requirements
Domestic and foreign markets are likely to have their own regulatory and compliance requirements, which come with practical and financial considerations, including consumer protection rules, product standards and product liability insurance.
In Laservision’s case it adjusts its payment terms and processes to each market.
For Laservision, setting up a local bank was crucial in gaining trust from local blue chip companies and clients in the government sector.
“A lot of our clients demand that they’re dealing with a company that’s based in their country and a bank that is based in their country. It gives them a lot of confidence,” said McCloskey.
Andrew Watson is the Executive Director, Export Finance, Efic