Without trade finance, Indian spices, clothing, and jewelry wouldn’t exist in the United States. Apple’s iPhones in China or any other international product at any respectable distance away from its origin.
According to Investopedia the World Trade Organization (WTO), international trade has increased by 80%-90% due to trade finance.
Companies must include trade financing in their business development plans if they want to keep this trend going.
How can you do this? Find out how trade finance can be integrated into your business development strategy.
Incorporate Inland Trade Finance for Market Penetration and Market Development
A business development strategy must include market penetration and market growth. You sell more of your product or service to repeat customers through market development.
Market penetration can be defined as the expansion of your product or service into other cities and provinces. However, it may also include inland trade finance. You may need to renegotiate trade agreements with provincial and local governments.
Let’s take, for example, jewelry. One business in a nearby city might purchase your jewelry and then sell it to its customers.
This client has a long relationship with you. You also know that the product is selling quickly in customers’ shops. You might then offer to sell the client additional jewelry at a bulk price.
The client accepts after negotiations. The client might not be comfortable paying you even though they have a long and positive relationship with you.
A trade financier or bank institution will provide a letter of credit stating that the jeweller will be exported upon payment.
Take a look at the Internet and Brick-and-Mortar Stores
Perhaps it’s time for you to expand your sales channels to the internet if you are already selling more of your product/service to clients.
Perhaps you’re a successful e-commerce merchant and want to open a brick-and mortar store.
This will give your customers more choices when it comes to where they can buy your products.
Trade finance is a great way to secure trade deals, especially when you have brick-and-mortar shops.
Creating new products or services for repeat and new customers
Repeat customers can double the amount of products that you are importing.
Your new product or service can also be a way to increase your client base. You should first create products for your existing customers before you jump to new clients. This is because it involves greater risk.
Trade finance is another option that can be used to build trust during times of economic growth. Trade financiers and banks can issue letters of credit. It is important to outline the terms that the exporter and importer must adhere to.
Last Thoughts about Your Business Development Strategy – George Scorsis Florida
It’s not possible to grow overnight. Businesses must work harder to get from market penetration to selling new products to clients.
We recommend slowing down when approaching growth. Trade finance can help you increase the number and quality of your clients, regardless of where they live.