Strong Australian dollar may impact start-up exporters

The strength of the Australian dollar could hamper the launch of some start-up exporters, according to leading industry group head.

Ian Murray, executive director of the Australian Institute of Export, told smartcompany.com.au that the dollar, which hit US99cents on Friday, will adversely impact firms that export overseas.

“If the dollar keeps at the level that it is, less people will go into export,” he says. “Things may be improving here following the global financial crisis but they have not done so overseas.”

“I wouldn’t advise everyone to wait before launching an export business. Some areas continue to be competitive, but you need to look closely at the market to see if there’s the return on investment you need.”

Murray adds that businesses need to put pressure on the government to boost the Export Market Development Grant. The grant, which helps exporters market their products overseas, suffered a $50 million funding cut last year.

However, Lynda Slavinskis, principal solicitor at export specialists Lynda Slavinskis Lawyers & Consultants, says that start-up exporters should be more concerned with their structure and strategy than the level of the Australian dollar.

“If businesses want to export, they will do it anyway,” she says. “Where they fail is the concept of export – how to market their products, how to deal with high margins and with suppliers, rather than the cost of it.”

“A lot of start-ups don’t have a pricing or export plan. They get excited that someone overseas wants to buy their products and they jump in. That’s where they stuff up, whether the dollar is high or low.”

“If a start-up comes to me with a rock-solid plan, proper payment terms and a pricing structure that doesn’t hedge bets on the exchange rate, I wouldn’t tell them to wait (to launch).”