Going Global (continued)
Are You Export Ready?
The more pressing question as you turn your creativity into a business is whether you’re ready to export. For someone new to the idea of international markets and exporting, the process can seem daunting. Granted, it’s not as easy as ringing up a sale from your website or in your gallery, but it’s not as difficult as you may think.
As you build your business and consider expanding your market beyond U.S. borders, here are some things you want to think about:
Do you currently have something that is selling well in domestic markets?
If your products or services are in demand in the U.S., the chances are good that customers in other countries will be interested in it as well. Remember the startling fact that 95% of all potential customers are located outside the U.S.? Why would you want to sell to only 5% of the potential market out there?
Do you have an interest in developing new markets and devoting some time and energy to the process?
If you don’t, then it’s time to close this lesson and go back to working your creative magic on some other aspect of building your business. The #1 determining factor in a successful export program is commitment at the highest level. It requires that you do some research and develop an export plan with specific targets, options for entering initial markets and a target list of prospects. Unfortunately, many companies tackle exporting halfheartedly, which can be a costly mistake.
Introduction: Are You Ready?
1. Thinking Like a Business
2. Business Structures
3. Access to Capital
4. Creating Revenue Streams
6. Finding Customers
8. Creating a Winning Pitch
9. Effective Negotiation
10. Intellectual Property
11. Managing Your Money
12. Going Global
Do you have the capacity to commit to overseas marketing and sales, and can your business and supply chain handle it?
Sales won’t shoot up suddenly overnight, but anything can happen in this age of social media and global post shares. Before you dip one or more toes in the water, do some forecasts on potential sales volumes, required inventory, cash flow and short-term financial needs to handle rapid expansion or last-minute product modifications to comply with export regulations. This guide on determining your export potential should help with these decisions.
Do you have the financial resources to support exporting?
If you don’t, all is not lost. Commerce’s Small Business Export Assistance (SBEA) team can provide you with assistance in these matters. They can connect you to the state’s foreign representatives, perform market research, business matchmaking, risk mitigation and export training.
The SBEA team can also assist you in applying for an Export Voucher. Made possible by a grant from the SBA, you can get up to $10,000 to offset the cost of:
- International marketing, website design and e-commerce
- Online listing fees
- Accepting international payments online
- Services of the U.S. Commerce Service
- Shipping samples overseas
- Export research tool subscriptions
- International trade show and trade mission fees
- Air travel and other expenses
What level of protection do you have for intellectual property?
Just because you have intellectual property protected in the United States doesn’t mean those protections extend overseas. If you have a unique or highly innovative product, speak with an intellectual property attorney to discuss other protections or filings you need to protect your IP and the potential risk of doing trade in specific countries.
Are there any modifications that need to be made to your product or service to meet foreign regulations, cultural nuances or entrenched competition?
When Chevrolet introduced the Vega in the 1970s, it didn’t sell well in Spanish-speaking countries. The reason? “Vega” means “no go” in Spanish. Before you get too far down the road, make sure that your product or service complies with relevant laws in the country you want to do business with. Make sure your packaging and messaging align with the culture and language.
Does your company have the knowledge needed to ship products overseas?
This isn’t a deal-breaker, mind you, since you can acquire this knowledge. Packing, labeling, documentation and insurance are areas you need to understand, along with the various shipping methods, U.S. export regulations and import rules of the country you’re targeting. You’ll also want to know what you’re getting into before you launch a major overseas initiative in terms of shipping and logistics.
Does your company have the mechanism and experience with export payment methods, such as letters of credit?
Exporters compete in a global marketplace, so you need to offer your customers attractive sales terms that are supported by the market’s traditional payment methods. The most secure of these are cash in advance and letters of credit, which minimize risk while addressing the buyer’s needs. The higher risk methods are documentary collections, open accounts and consignment. As you negotiate your contracts, consider which method is best for you and your customer to build trust in the relationship while minimizing risk for both parties. The most secure terms for you may be the least secure for your customer, so you may need to meet in the middle somewhere, especially if the relationship is new.