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Posted at 09:00 AM ET, 08/15/2013

Small business advice: How to start exporting

Ninety-six percent of all consumers live outside the United States, which makes exporting your products a highly effective way to expand your small company’s customer base and boost your bottom line.


Saunders offers four tips that helped his business expand to 70 countries. (Akio Kon - Bloomberg)
However, it isn’t always easy to get started.

There are plenty of potential pitfalls, and effectively navigating around them is critical. Our company now does more than half of our business abroad, but we had to learn some hard lessons along the way.

The following are the most valuable recommendations I can offer to help you dodge the landmines and grow your market.

1. Identify strategic target markets.

Free trade agreements substantially reduce the headaches associated with exporting. Consider beginning with countries that have solid trade relationships with the United States and fit your target market.

Between NAFTA, CAFTA-DR and TPP, there are 18 free trade countries to consider. There’s also a wealth of additional information about trade agreements at www.ustr.gov.

2. Secure reliable, trustworthy in-country representation.

Given geographic challenges, cultural differences and time zone issues, you need eyes and ears on the ground to represent you. But you also need to set clear parameters for exactly what your representatives are and are not responsible for.

The Gold Key Matching Service, offered by the U.S. Department of Commerce, International Trade Administration (ITA), connects U.S. businesses with potential overseas agents, distributors, sales representatives and business partners.

Our company most recently took advantage of this service to help us build our business in the Australian market. Building an end-to-end network of representatives that serve your interests is essential.

3. Decide how you’ll set pricing.

You can work strictly in dollars, or you can play the international currency game and charge prices using local currencies. There are benefits and drawbacks to both. Reduce confusion by deciding how you’ll do it and stick with one plan.

Upon launching an exporting program, there are myriad other issues you’ll encounter, such as export controls (depending on your industry), customs, tariffs and freight forwarding complications. Those are bridges you will need to cross once your export business is up and running.

Quality vendors (shippers, freight forwarders, etc.) can be of enormous help. Just make sure the vendors you choose have plenty of experience dealing with your target country.

4. Be overly clear with pricing and financing arrangements.

Introducing international markets to your small firm’s accounts receivable equation adds a new, sometimes challenging wrinkle. Explicit pricing and financing arrangements can help save you headaches if things go awry. Be very clear on payment terms, methods and timing.

For instance, our Nigerian client ran into timing issues with a million-dollar project. The project was delayed, and as a consequence, so was the installation of our equipment. The substantial final payment to us was held until “commissioning” was complete.

Lesson learned: When setting payment deals, we now make sure to cover hard costs and some profit-in-progress payments, leaving only a little profit - as little as possible - on the table for the final payment.

Over the past four years, our export business has grown nearly 200 percent — a proud accomplishment given the economic climate — and a substantial amount of that success can be attributed to the programs and services outlined here.

Building a relationship with your local Department of Commerce office and taking advantage of what they offer just might be the key to phenomenal growth for your small business.

Avram Saunders is the chief executive at Lighting Eliminators & Consultants, Inc., which provides lightning-prevention technology to industrial sites around the world. LEC earlier this year earned an exporting award from the Department of Commerce.

By Avram Saunders  |  09:00 AM ET, 08/15/2013

Tags:  small business, exports, trade, business, small business advice

 
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