Chapter 1: Introduction: THE WORLD IS OPEN FOR BUSINESS

In This Chapter

  • Selling globally is easier than ever.
  • More help is available than ever.
  • Your assumptions may not be accurate.
  • You can transform your business—and yourself.

The world is open for business: your business. Today it’s easier than ever for a company like yours, regardless of size, to sell goods and services across the globe. Depending on what you’re selling, with the right kind of phone directory for Toronto or Vancouver you can make sales calls and ship product to Canada tomorrow. In fact, more small U.S. companies sell to Canadian buyers than to buyers in any other country.

More U.S. small and medium-sized companies are exporting than ever before. In 2005, 232,600 small and medium-sized companies exported to a least one international market, a nearly 3 percent increase over 2004. The value of total goods and services exports grew almost 17 percent from 2009 to 2010, to more than $1.8 trillion. Your company may be included in these numbers but could sell even more. Or if your company hasn’t made an international sale yet, yours could be the next one to sell globally.

If you have a Web presence, you have a global marketing and order-taking platform. For a few more dollars, you can process credit card payments for buyers in Australia or translate key pages into Spanish and other languages to further your reach. Easy.

Want more sales channels? Online marketplaces offer virtual storefronts and a ready-made global army of shoppers. They also offer payment solutions, and you can choose a shipper that will take care of the required documentation for you. The shippers want to help make things easier too, and many offer free international business advice, customer broker services, cost calculators, and financing. Plus, they’ll pick up goods and documents from your back door and deliver them to almost any address in the world. And you can track everything on their Web site. Easy.

Want even more sales channels? If Web-based marketing and sales are insufficient to meet your sales growth appetite, you can attend trade shows in the United States where buyers from around the world come to purchase U.S. goods and services. Show organizers will facilitate introductions to the buyers, working with agencies of the U.S. government to provide matchmaking services on the show floor. These same government agencies can arrange for you to attend shows in other countries, where the connections and influence of your embassy network can save you time and money generating new business. Government agencies can find buyers for you and arrange introductions in more than 100 countries. Call this service “customized business matchmaking.” Easy.

Today’s global trading system is ideal for the smaller company employing more than one marketing and sales channel to sell into multiple overseas markets. But most U.S. exporters currently sell to one country market—Canada, for example. And the smaller the company, the less likely it is to export to more than one country. For example, 60 percent of all exporters with fewer than 19 employees sold to one country market in 2005. Imagine the boost in the bottom line if they could double the number of countries they sell to.

The opportunity for selling into a single region, such as Central America, and taking advantage of free trade agreements, such as the Central America Free Trade Agreement (CAFTA), is substantial. The help available and discussed in this book can quickly expand your thinking—and your sales—from one market to many.

In choosing from among these channels, markets, and countries, what’s the best strategy for your business? There’s help for that too—from private consultants, from your home state and local U.S. government sources, from the Web, and from this book. And much of the help is free or costs very little. It is easy to access, easy to use.

If what you read so far comes as a surprise—particularly that exporting is relatively easy, even for very small businesses, and that there are scores of local yet worldly folks ready to help you succeed—then you are not alone. The people whom we interviewed for the case studies in this book—like many potential exporters—say that their number one need is for more basic information on how to export.

Surprised? Then you also might be surprised by the old global business assumptions and the new ones replacing them.

This book is mainly written for you, the millions of business owners or their business development gurus who could export or export more. You’ve asked to have spelled out in plain language how people busy running their businesses can learn what they need to know to grow their sales globally. And here it is: A Basic Guide to Exporting.

If you purchased this book or received it from one of our corporate partners, chances are you have already answered for yourself this fundamental question: Why bother?

Exporting can be one of the best ways to grow your business:

  • Grow your bottom line.
  • Smooth your business cycles.
  • Use production capabilities fully.
  • Defend your domestic market.
  • Increase your competitiveness in all markets.

Exporting is strategic in another way. With the volume of trade growing exponentially and barriers to trade falling, competition in a company’s domestic market is intensifying, particularly from foreign competitors. We need to compete in our own backyard while we simultaneously open markets for our products and services in other markets:

  • Ninety-five percent of the world’s consumers live outside the United States. That is a lot of potential customers to just ignore.
  • Foreign competition is increasing domestically. To be truly competitive, companies must consider opening markets abroad.
  • Exporting is profitable. In fact, 60 percent of small companies that engage in exporting derive 20 percent of their annual earnings from exports.
  • Exporting helps businesses learn how to compete more successfully.

According to a World Bank report, Global Economic Prospects, trade in goods and services is likely to more than triple by 2030. Over the same period, the global economy will probably expand from $35 trillion in 2005 to $72 trillion. The number of people considered “middle-class” will triple to 1.2 billion, enabling them to afford international travel, better education, and imported goods from the United States. Exports from the United States, according to the same report, are expected to grow by nearly 10 percent per year for the next several years. Your product or service could be among them.

With this significant projected growth in global trade, fueled in large part by newly affluent consumers in China, India, and other developing economies, the challenge for businesses of all sizes in the United States is how to dip into this incredible revenue torrent. A Basic Guide to Exporting aims to help prime your pump.

As global trade grows, companies that engage in it report a shift in income derived from their export sales compared with sales in their domestic markets. A 2002 study of U.S. exporters found that 60 percent of small companies in the survey derived 20 percent of annual earnings from exports, while 44 percent of medium-sized companies did. When asked whether export sales would grow at least 5 percent per year for the next three years, 77 percent of the small firms and 83 percent of the medium-sized firms said they would.

You might reasonably respond by saying, “That’s all well and good, but do I have what a person in another country will buy?” As you delve further into this book, you’ll read about companies of all sorts that produce an amazing array of products and services and have grown their businesses through exports. Waterless urinals to Japan? Flooded with new orders. Chocolates to the Middle East? No problem. Fiberglass dome houses to India? Business is booming. Pollution eating microbes to Argentina? Can’t keep the little critters in stock. Industrial lubricants to Vietnam? The skids are being greased for other markets in Southeast Asia. Franchise concepts in Europe? Everything from furniture moving to senior citizens’ companion services.

Even companies that don’t make anything are flourishing abroad. These companies make money by providing wholesale and distribution services. And there are thousands of them—all small.

Another answer to “Why bother?” is that exporting adds to the knowledge and skills of everyone in a company who does it. Doing business in a market that’s beyond one’s borders can have a transformational effect on its practitioners. The experience of forming new relationships, getting up close and personal with another culture, figuring out how to meet the needs of others, and learning how to be inventive in addressing new business challenges not only is personally rewarding; it also leads to improvements in products and makes companies stronger in whatever market they compete.

As one small exporter interviewed for this book put it, “Exporting is easier than we imagined. Exporting opens your horizons to what’s going on in the world economy. We need to take that step outside ourselves and develop relationships and open doors. It may start out small. It did for us. But it’s growing. We are a better company and better managers. Maybe even better persons. And to me that’s what success is all about.”

FACT: Exports accounted for nearly 26 percent of U.S. economic growth during the past decade, and they are expected to grow by nearly 10 percent per year for the next several years.

INSIGHT: Exporting has brought growth to many U.S. businesses. It can bring growth to your business too.

FACT: Some small business owners think that exporting is too risky.

INSIGHT: Exporting to some markets, such as Canada, is no more risky than selling in the United States. Different international markets have different levels of risks. Almost any perceived risk can be identified and reduced by using the affordable export assistance now available.

See Also: Case Study