The Complexity of Exporting with Risks and Rewards

Are you receiving inquiries from international customers interested in buying your product or service? Or maybe you’re hoping to diversify your revenue stream or just want to expand your income opportunities by looking towards international customers?  But are you export ready?

World markets have changed dramatically in the past 10 years, and the pace of change is accelerating. It’s a challenge to keep up with the changes, but good business decision-making depends on having up-to-date information. While the U.S. is a huge market in itself, two-thirds of the world’s purchasing power exists offshore in foreign countries (Small Business Trends). This represents a big opportunity for small businesses to expand and grow. But, as with all growth strategies, knowing when to make that leap into new markets isn’t quite so easy, especially when faced with the unknowns of cross-border selling and a potential maze of regulations.

What are the conditions that will help make a company ready to export?

COMPANY ANALYSIS: Are you willing to make a commitment to exporting? This doesn’t necessarily mean spending huge amounts of money or hiring large number of new staff. Instead, it means making a commitment to some level of resources and dedication of staff time. If your company wants to succeed at exports, upper management needs to be committed to exporting and to planning for these exports.  All stakeholders are on-board and are clear about the level of scale required to support exporting. Staff must be dedicated to support the effort –- this includes everything from logistics to accounting to marketing.  Financial resources will also need to be allocated to support international travel to trade shows and to meet in-country buyers and distributors. Processes, systems and resources must also be put in place to respond to international inquiries — this includes your website, email, phone calls, etc. The global road ahead needs a map, an international marketing plan that will have clear goals, strategies, target markets, global website and protecting intellectual property besides assuring how to get paid.

PRODUCT ANALYSIS: Certain country regulations apply that will force your product to be modified. Does your business have the ability to modify its product/service? From electrical voltage to safety connectors to fire retardant materials, there are regulations for all.  What about the ability to translate marketing materials to meet market requirements? What about capacity? Can you scale to meet the demand for export orders? While the U.S. has a certification for each industry, like UL for electrical connectors and FCC for all electronic products that oscillate at 9 kHz or higher or NSF/ANSI 61 for potable water treatment, the same will occur in the European Union market, where they have created the CE MARK. The CE MARK applies to a wide range of industries from electronics, to water to toys, all under one roof, the CE MARK.  Does your product need to be CE MARK compliant?

MARKET ANALYSIS: There are 195 countries in the world and 95% of the world’s consumers live outside the U.S. (U.S. Chamber of Commerce). Additionally, 80% of the world’s purchasing power and 92% of the world’s economic growth also stand outside the U.S. (Business Roundtable). So, a look at the map will tell you that our two neighboring countries share the same Western culture and many historical links keep us together. Some countries have signed free trade agreements with the U.S., some countries speak the same language as the U.S., some countries are on the prohibitive list and we are not allowed to trade with them, and some countries are in the group of developed economies versus the countries who are in the emerging market category. Each country offers unique opportunities, and an export readiness analysis will be helpful to prepare you to succeed in the global economy.

Taken from Export.gov, below is a short questionnaire or checklist to start your company for getting ready to export (Export)

1. Does your company have a product or service that has successfully sold in the domestic market?
2. Is your company’s management committed to developing export markets and willing and able to dedicate staff, time and resources to the process?
3. Does your company have or is it preparing an export business plan with defined goals and strategies?
4. Does your company have sufficient production capacity that can be committed to the export market? Will financing be required for any expansion?
5. Does your company have the financial resources to actively support an increase of product sales in targeted overseas markets?
6. Do you have both U.S. and foreign Intellectual Property Protection for your product?
7. Does your company have capabilities to modify ingredients and product packaging to meet foreign import regulations, cultural preferences, and survive competition?
8. Does your company have appropriate knowledge in shipping its product overseas, such as Incoterms, identifying and selecting international freight forwarders and freight costs to ensure customs clearance overseas?
9. Does your company have knowledge and experience of export payment methods, such as developing and negotiating letters of credit?
10. Does your company have knowledge and understanding of U.S. export controls and compliance?
11. Do you have staff that is culture-savvy to handle the different types of doing business internationally?

Fortunately, there is a wealth of resources available for free that your company can start using to benefit from exports.

The Duquesne University SBDC provides free business consulting for entrepreneurs in the Greater Pittsburgh area. Click here to request free consulting, or contact the SBDC for additional help and information.

Brent Rondon is the manager for the Global Business and International Entrepreneurs Program at the Duquesne University SBDC. With over 23 years of experience assisting U.S. companies to sell globally, establishing relationships with business centers in Latin America and opening businesses in the U.S. as Foreign Direct Investment, Brent also teaches export/import seminars, as well as lectures, at the Schools of Business for Duquesne University, the University of Pittsburgh and Carnegie Mellon University. He earned his MPA Degree from the Graduate School of Public and International Affairs at the University of Pittsburgh.