How Entrepreneurs Can Benefit From International Trade

I am always surprised when people tell me that they don't import anything from abroad. Often they find it hard to believe that products like toothpaste and confectionery, which are available on the high street, would not be available on sale somewhere in the world if the importer was not concerned about shelf space and sales opportunities.

However, there are actually very few products which we can't import, and an increasing number are coming from outside of Europe, which is why it's important for a business to make sure that its products are distributed both domestically and internationally.

How is it possible for a business to trade internationally? Is it a straightforward process?

Competitive advantage is just a setting

3 of hearts playing card

Nowhere is this more apparent than with Competitive Advantage. This is an idea that I first heard from Bill George, the second President of Brigham Young University.

Bill defined Competitive Advantage as the difference between an entrepreneur's market shares and costs.

If you own a piece of a piece of land that makes $50,000 a year, you have a great deal of influence in determining the price that others pay to buy the land. That influence can increase or decrease as the value of the land changes over time.

For instance, a new drug could be brought to market, have a huge impact on the health of the customer base, and the price of the drug could drop by 50%.

However, before the drug could be brought to market, it had to pay for its own development – which means that the development costs were almost equal to the sales revenue.

Although you can make a lot more money selling a drug for $20 than a drug for $50, it is not worth developing a drug for $20.

Therefore, if you want to maximize your Competitive Advantage, you should figure out how to turn your costs into value, or how to deliver value that others can't match.

This takes imagination and a willingness to be creative.

Since any business can be a commodity business, in a competitive landscape, you can give value that your competitors can't match.

Market size doesn't matter

Airport bank board business

One of the examples that Bill George mentioned to me was that the largest US supplier of computer chips is Intel (NASDAQ:INTC). In terms of revenue, it represents less than 1% of the total value of the market.

The bottom line here is that size doesn't matter. If you are giving people value, they will buy from you.

If you focus on value and price, you can gain market share in ways that aren't apparent to you.

For example, if you are a small Mexican ice cream business, you can invest in an ice cream vending machine and sell ice cream to people with an Internet connection.

You might sell 10,000 ice creams a day, which makes your ice cream business look large, but the revenues for those ice creams are much lower than a small ice cream shop with real store front.

In that case, your Competitive Advantage is being creative. You have figured out how to deliver a great product that is way more convenient than most people expect.

The simple reality is that many entrepreneurs are too focused on the size of the market to really understand their Competitiveness and have a competitive advantage.

Protected trademark

Whilst you may not always be a member of the EU Customs Union, you can still sell your products to a European Union member state, but if you export into countries that are outside the European Union, or are part of the European Free Trade Association, you can get the additional benefits of a 'protected trademark', which is essentially the trade name, symbol or design for the product.

Should you decide to hold a logo, symbol or trademark for your product, it is important to consider exactly who can be considered your client. This might be people, organisations or companies who have paid you to use your logo, symbol or trademark and who have specifically agreed to do so.

It's also important to be aware that if you use another company's trademark, you will be able to claim that use of your trademark infringes your right to the intellectual property that is protected by your trademark.

So your rights to protect your intellectual property should not be abused and you should only use the logo, symbol or trademark when you have a valid contractual agreement to do so.

Think like a creative product designer

young start up list

So, how do you turn costs into value?

When I was in college, I was the Director of Creative Writing at my university. I often helped my students to develop a creative story.

I wanted to make a few points about how to think like a creative product designer. First, think like a product designer. Imagine yourself as a product designer.

We usually think of product design as an act of the physical building of an object. However, to be a creative product designer, it is important to think about how to bring a product to life in the imagination of your customer.

What are you offering? What are the benefits of using your product?

How do you create emotional value? You have to come up with products that are surprising and fun.

Why do people want to use your product? What would happen if your product became available to your customer?

With the help of your imagination, you can get more insight into your Competitive Advantage.

This also means that you have to be ready to take a risk. Sometimes your greatest competitive advantage comes from taking risks.

 

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