When giving advice to small companies that are looking to expand into international markets, Kim Johnson, an international marketing consultant with Cassidy and Associates Inc., always starts with "don't be intimidated by the thought of doing business in a foreign country."
Though it sounds simple, such guidance is exactly what the majority of small companies trying to export need, she said. Many companies try to enter foreign markets after learning from news stories about opportunities there, but they are quickly discouraged by language and cultural differences that stand between domestic and foreign markets.
Market research -- about local economies and the products in demand by their inhabitants -- is the homework any business has to do before entering a new area. And many exporters can avoid failure by researching foreign markets the way they would any domestic market. Companies often neglect to use traditional sources of information -- such as libraries and private companies -- because of the difficulties many companies have tackling the concept of exporting.
If you look at a company on the East Coast trying to expand to the West Coast, Johnson said, "They do a lot of research, but they don't take the same steps when they look at foreign markets. You use your same business practices."
Tom Watson's accounting firm first discovered foreign markets when his firm was fulfilling a contract with the Agency for International Development in Egypt. Realizing the potential market in developing countries, the firm started looking for places to "export" its services.
Watson said identifying international clients entails gathering as much market data as possible. Foreign embassies and the U.S. and Foreign Commercial Service have information about countries' political systems, economies and basic business attitudes, as well as lists of accounting and consulting firms in the region. Watson said he also looked to professional trade groups for the same lists.
Finally, he contacted local government officials to evaluate opportunities in the market and to find a local accounting firm to work with. "It's fairly easy to find a local firm that needs help," he said.
Watson's ease at finding information about foreign markets is typical of companies that know where to look for it. The Commerce Department and foreign embassies readily provide information to potential exporters to promote international trade. This year, the Small Business Administration and the Commerce Department put together a free guide called "The World Is Your Market" that includes lists of state, federal and international programs set up to help exporters.
But Watson's experience also is different from that of a manufacturer, whose prime concern -- sales -- can be tackled by a local distributor.
Few entrepreneurs can afford to spend the time away from their companies that it takes to sell directly in foreign markets, Johnson said. But to find a good, trustworthy distributor, some research is needed. The relationship between distributor and small-business owner is crucial, requiring continuous follow-up. Many small-business owners find distributors at industry trade shows.
During its first 10 years in business, Darco Southern Inc. received a number of inquiries from foreign buyers but didn't know how to respond. Finally, the small gasket maker in Independence, Va., decided to explore opportunities abroad to expand its market share.
"We felt as though we had pretty much saturated the domestic market and we had a choice to make," said Jill Burcham, the family-owned company's marketing director. "Either we were going to stay at the same growth level or we were going to anticipate and we were going to grow."
For Darco, growth meant finding foreign buyers, and the Virginia Department of World Trade was able to help. A group of students from Virginia Tech analyzed the company's books and helped them to "smooth over the bumps" they were running into, in addition to identifying Australia as the best overseas market in which to begin exporting.
After ordering the telephone yellow pages from Australia, Burcham contacted some potential customers, made a few trips and lined up several distributors for the company's products.
Burcham is quick to point out the benefits of being a small exporter. "As a small company, we have an advantage because we have more flexibility," she said. "We're not locked into a particular production system." That flexibility allows the company to capitalize on opportunities a larger company might miss.
Marcus Griffith, however, thinks being too small can be a drawback when it comes to foreign markets. Marcus is president of Hairlocks Co. Inc., which makes hair care products for the black and Hispanic market. He said that competition is not as stiff in foreign markets as it is in this country, but that being a small company with little name recognition has complicated matters.
"As a relatively small company, we usually have to go with a distributor that is not as well established," he said. "And because of that, it will be more difficult to get paid." But in many instances, he added, he finds smaller distributors who are more aggressive because they have to prove themselves.
Still, getting past the initial fear of going overseas is a difficult step that confines many companies to domestic markets.
"A lot of people put up a brick wall and think it's overseas -- I can't do it," Burcham said.