Trade financing as a strategy for business development

Trade financing as a strategy for business development

Without trade finance, there would be no Indian spices, clothing, or jewelry in the United States. Or Apple’s iPhone in China, much less any other international product within any respectable distance of its origin.

In fact, according to Investopedia, the World Trade Organization (WTO) estimates that international world trade has expanded by 80%-90% thanks to trade finance.

For this to continue, companies must incorporate trade finance into their business development strategies.

How do you do that? Learn how you can incorporate trade finance into your business development strategy.

Include domestic trade finance in market entry and market development

Market penetration and market development are key parts of a business development strategy. Market development involves selling more of your service or product to repeat customers.

While market penetration is about expanding your product or service to other cities and provinces, it can also involve internal trade finance. Because you may need to renegotiate local and provincial trade deals.

For example, let’s say you sell jewelry. A company in a neighboring town can buy your jewelry and sell it to their customers.

You have a long history with this client. And know that your product is selling fast in your customers’ store. In this case, you can offer to sell the customer more jewelry at a total price.

After negotiation, the customer agrees. However, despite the long, positive history you’ve had with the customer, the customer may not feel comfortable paying you before you ship the jewelry.

This is where a trade financier or banking institution steps in, providing a letter of credit promising that you will export the jewelry upon payment.

Consider the Internet and physical stores

If you’re already selling more of your product or service to customers, maybe it’s time to branch out into another channel, such as the Internet?

If you’re running a successful e-commerce store, maybe it’s time to start a brick-and-mortar store too?

This way, your customers have more options where to buy your products.

Especially when it comes to physical stores, trade finance can help you secure new trade deals for imports and exports – especially when there are multiple currencies involved.

Creating a new product or service for repeat and new customers

With Loyal Customers, you double the number of products the Loyal Customer imports.

And with new customers, your new product or service will expand your customer base. It is important to create new products for your existing customers first before moving on to new customers as this involves more risk.

Again, trade finance can help cultivate more trust during this growth period. Because trade financiers or banking institutions can create letters of credit specifying the conditions that importers and exporters must follow.

Final thoughts on your business development strategy

Know that growth doesn’t happen overnight; it is more difficult for businesses to move from market entry to delivering new products to new customers.

That’s why we recommend you take your growth slowly. However, know that trade finance can help increase the number of customers you trade with, no matter where they are.

What is your opinion on trade finance? How has it helped your business? Share your thoughts, comments and responses with us.

#Trade #financing #strategy #business #development

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