Smaller businesses often think that exporting is only for large multinational companies. But that's usually not the case. In fact, more than 97 percent of all U.S. exporters are small and medium-sized businesses employing less than 500 people.
What's really surprising is the number of businesses that aren't exporting. According to the U.S. Department of Commerce, less than one percent of the 30 million companies in the U.S. actually sell their products internationally. Many of these firms could benefit from exporting, but have yet to do so.
Why would a business that is successful in the U.S. market want to start marketing overseas? Two top reasons include increasing sales volumes to extending product life cycles. But the bottom line remains that exporting can be a way to keep your business growing and profitable. And if your company doesn't target new overseas markets, chances are your competition will.
Furthermore, the export process has become much more streamlined in recent years for even the smallest firms due in part to the internet, improved logistics services, and the array of export assistance programs available from the U.S. government and other organizations. If you already have a track record of selling in the United States, one of the world's most open and competitive economies, then you are likely a good candidate for selling overseas.
Before launching an export initiative, it is essential to plan and prepare. Selling a product or service overseas means doing business in a new environment where language requirements, export documentation forms, and payment options all may be different. To deal with those challenges, here are 7 tips to consider:
7 Tips for New Exporters
Tip #1—Make a Commitment
Businesses new to exporting can expect to face numerous challenges such as redesigning packaging or establishing a new distribution channel. The whole process usually takes time—often two to three years to establish a foothold. No matter how prepared businesses are to enter an overseas market, they initially will make mistakes. It's important that top management understands this because, without that strong backing, there may be a tendency to pull back at the slightest sign of a setback.
Tip #2—Do Your Research
Many companies spend more time and money researching how to expand their existing domestic market than on how to sell in another country. To be successful overseas, do some research on potential markets. Which countries are leading suppliers or leading importers of your products? Which countries have the lowest duties? Write an international marketing plan, but whatever strategy you choose, address a range of potential issues from unique labeling requirements to new competitors.
Tip #3—Focus Your Efforts
In creating any new process, it's best to focus on one area first. Likewise, many successful exporters began by selling in just one overseas market, learning from that experience, and then applying that knowledge to new international markets. For example, first-time exporters in Minnesota often target Canada as the first international market to enter. The proximity of Canada and the benefits of the reduced North American Free Trade Agreement (NAFTA) tariffs are advantageous for new Minnesota exporters ramping up on their export knowledge.
Tip #4—Set Aside Resources
Entering new markets requires resources—primarily time and money. Companies in the best position to export already have an established track record of domestic growth and a steady revenue stream. When you enter an overseas market, you'll have a steep learning curve. Often, new requirements and in-house procedures can range from how goods are packaged to how sales orders are processed. For many companies, gearing up a business to export means having to reallocate resources from domestic business opportunities.
Tip #5—Increase Your Company's Export Knowledge
Look for opportunities to develop and expand the export knowledge of your staff. Work toward credentials to ensure you develop a baseline of skills. For exporting companies, encourage staff to attain the Certified Global Business Professional credential. The CGBP credential is a nationally recognized professional designation that demonstrates an individual's practical knowledge in conducting international trade including supply chain management, international marketing, and trade finance.
Tip #6—Line Up Experts
It's unlikely that one person will know all aspects of the export process in full detail. As you prepare to export, establish a network of specialists with expertise across a range of issues such as export documentation, letters of credit, or international contracts. You will want to develop some expertise in-house; others you will want to outsource. At a minimum, you will want to identify a freight forwarder, banker and attorney who can assist you. A good starting point for new exporters is your state's District Export Council, an organization comprised of local business leaders who act as consultants to small- and medium-sized businesses that want to export.
Tip #7—Leverage Government Resources
The U.S. Commercial Service, which has Export Assistance Centers located across the U.S. and offices in many American Embassies and Consulates overseas, is a global network of trade professionals who can provide ground support in many overseas markets to assist U.S. exporters. Services include helping U.S. companies find new business partners overseas, exhibit at international overseas trade shows, research opportunities in new markets, or address market access issues. To find the U.S. Commercial Service office nearest you, visit www.export.gov.
Successful exporters can generate increased revenue and profits. But exporting is not without its own set of challenges and requirements. For small and medium-sized businesses that are first-time exporters, planning and preparation are critical to ensure success.
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