Solatube is a San Diego-based maker of tubular skylights. But these aren’t ordinary skylights. They employ patented technologies that bring more natural light in, and they come with optional kits that convert the skylight into a light fixture as the natural light fades or into a ventilator for kitchen and bathroom use. As the price of electricity increases, skylights for both home and commercial use save money and are good for the environment.
Solatube was founded in Australia in 1991. Its directors disagreed on whether going international was the best direction for the company, but in the end they elected to give it a try. They then decamped for California to be closer to the U.S. domestic market and to Europe and Latin America. According to Solatube Global Marketing’s President Brett Hanley, “A smaller company like ours can’t be experts in every market. We’re not that naive to think we can do it all.”
Solatube also needed a way to insulate itself from the bottom end of the business cycle in its new home market. “We needed to find entrepreneurial folks overseas who can find the people working on the roofs. We need national distributors with business backgrounds who can set up everything for us,” says Hanley.
At first, Solatube was mostly passive in its outreach, meeting potential distributors at trade shows or evaluating prospects who contacted Solatube through the Web or by phone. Results were very mixed, and the company spent more time on unfocused searching than on selling and growing the business.
So Solatube approached the U.S. Commercial Service’s Export Assistance Center in San Diego. “We did things the hard way for a number of years until we met the Commercial Service. We wished we had met them before,” says Hanley. Trade Specialist Julia Rauner Guerrero entered the picture as Solatube set its sights on France. With help from her colleague Eva Prevost in Marseille, Guerrero identified a number of master distributor prospects, including one who had seen Solatube promoted on the U.S. Commercial Service Web site in France (www.buyusa.gov/france). In the end, Solatube chose this distributor to represent the product line. Everything was wrapped up in less than six months, and orders were placed for $100,000 worth of product.
Guerrero says, “We encouraged Solatube to develop a regional sales strategy in France and helped develop that strategy. They also followed our advice to engage a French-speaking staff person at their San Diego office, as language was going to be a barrier in developing their business further.”
Thanks to the Commercial Service, Solatube is now selling more than 160,000 units per year in 40 different overseas markets. International sales have surpassed 15 percent of total sales with no ceiling in sight for the company’s skylights, which are brightening homes and businesses from London to Mexico.
Hanley says that Solatube’s number one lesson learned was that small companies can expand internationally, gain significant new sales, and add jobs. Don’t try to do it all yourself, says Hanley. It’s easy to get overstretched and to waste valuable time. “There is a lot of excellent free and low-cost help out there, including that of the U.S. government and its partners,” he advises. “In the case of France, our Commercial Service contact there served as a filter for us. The French distributor would talk to Eva as both our representative there and as a representative of the U.S. government, and she would interpret things for us. There was a French-to-French thing going there that worked out great for us.”
The most important thing you can do is to find good distributors in your target markets. You can spend lots of time and money finding them on your own, but Hanley offers this recommendation: “Let the government do it for you. This is their niche, and they’re the best at it.”
Hanley is a strong advocate of diversification: “Diversifying economic risks really does work. When it’s sunny in some of our markets, it’s snowing in others. When business is down in the States, it’s up somewhere else. Our overseas sales have been growing 25 percent a year for the past six years. We now enjoy a benefit of a strengthening euro against the dollar.”
Moreover, Hanley says, “Our international success has improved our acquisition profile. Not that we’re looking to sell, but if we ever are in the future we’ll be worth a lot more because of the international dimension of our business.”
Navigating cultural issues with distributors can be a challenge. Don’t be reluctant to ask for help. “In one instance,” says Hanley, “After we agreed on a deal, we sent a contract to a distributor unsigned by us. The distributor was very upset, believing we didn’t trust him. This would be unthinkable in his culture. There was no legal risk for us to sign it, so the reason we didn’t was probably cultural.” Knowing how not to unintentionally give offense is an important and easily learnable business skill.
Exporting has made Solatube’s domestic business stronger also. Hanley explains, “Experience in Europe and elsewhere in the world has turned us into something of a thought leader in our U.S. business dealings.” Environmental practices in commercial buildings are sometimes more advanced in Europe than in the United States. Solatube has brought those ideas back to the United States and had them adopted by its U.S. customers. “It gives us a competitive advantage,” Hanley says. “Also the U.S. companies we do work for overseas are eager to use us here in the United States. The international work gives us credibility.”