As the world becomes more global and interconnected, a small business may have the opportunity to grow by exporting its products to foreign markets (or even may find its products are being exported by others). However, achieving success is not as simple as having a strong desire to sell products or services globally. Proper planning and compliance is a must. Here are three tips for a small business to help export confidently and grow its business in a foreign market.
Understand the Market
Understanding whether a particular country is a suitable market is essential to any successful export strategy. Be able to answer the question: “Why this country?” If you are unable to provide an answer, you should not go. To help you determine whether a particular market is suitable for you, ask yourself if there a market for your particular product or service. Also, understand the regulatory environment – are there limitations or restrictions that will impact your ability to sell your product or service in the country? Identify any other barriers to entry. Understand the sales and distribution network for your product or service in that particular country. Learn about your competitors and their products and prices. Understand how cultural differences may impact how you market your product or service.
Identify the Correct Partner
Many small businesses do not have the resources to effectively market and sell their product or service in a particular foreign market all alone. Identifying the right partner to assist you in the foreign market is critical. Do your due diligence when selecting a partner. Is the potential partner who he says he is and can he do what he says he can? Also, consider a company that sells a complementary product or service, that understands how to do business in the market and that has a good distribution network in the country. Determine whether the U.S. considers the potential partner to be a denied person or entity. Will you form a joint venture or engage the local partner as your agent or distributor? Know the repercussions for terminating the partnership before making your decision.
Take Advantage of Free U.S. Government Resources
Remember the U.S. government has agencies available to help a small business to export its product or service, including the United States Commercial Service, the Small Business Administration and the Export-Import Bank of the United States. For example, the United States Commercial Servics can help you with market research and identifying potential partners. The Small Business Administration provides counseling, training and financing to support small business export opportunities. The Ex-Im Bank can help you secure financial support that will enable you to expand your sales to existing markets and to enter new ones and can protect you against the risk of non-payment, enable you to extend credit, access working capital or provide term-financing to buyers. Many state and local governments also offer assistance to small businesses. In addition, retain appropriate advisors, including legal, accounting and a good freight forwarder. These individuals will help you understand regulatory issues, whether your proposed business is permitted, export compliance, and tax and trade treaties that may impact the structure of your export strategy. And last but not least, ensure you understand your obligations as an exporter. You must comply with U.S. export control requirements and sanction requirements.