Think global trade is just for big businesses? According to The Hill, 98 percent of the 300,000 American companies that export goods are small and medium-sized businesses. And those businesses account for one-third of exports from the U.S. We spoke to Laurel Delaney, founder and president of GlobeTrade.com and author of Exporting: The Definitive Guide to Selling Abroad Profitably, to find out how small-business owners can begin to sell their products globally.
Small Business Center: How much in U.S. goods gets exported each year, and has that figure increased in recent years?
Laurel Delaney: The most recent Commerce Department data shows U.S. businesses exported $2.35 trillion in goods and services in 2014, hitting a record high for the fifth straight year. U.S. goods exports increased 2.7 percent to a record $1.64 trillion in 2014.
Are there indicators that show when a small business is ready for global trade?
If they are currently successful on the local front and have the ability to scale, they are likely to be successful on the international front, but it depends on many factors. For example, the business owner must be prepared mentally and emotionally for the endeavor, and be ready on an operational level. They must understand how to successfully run a local business, and know how to use the latest technology. Finally, their business must have export potential.
How should business owners determine which markets to expand in?
Some choose a market based on how much they like the country, or because through online research they determine there is a need for their product in a particular country. However, some questions should be addressed when picking a market. For instance, it’s important to understand who will buy your product, and why. You’ll also need to determine the size of the market, who your competition will be, how new the product is to the market, and whether or not there are any growth opportunities there.
These are just a few of the many questions you need to address before digging deeper into market research. You should then consult with an export assistance center (EAC) in your area to help you further determine what might be your best top markets. EACs can help you analyze market factors and conditions in each of the countries you think are ripe for entry. GlobalEDGE offers an interesting market potential index that’s worth a look. In addition, I authored an article that outlines how to conduct global market research using global business intelligence tools. It’s important to keep in mind that one market at a time works best, especially for novice exporters.
What are some things business owners can do to attract foreign buyers to their website?
You must participate in and be active on as many of the top social media platforms as possible for foreign buyers to find your site. Attracting paying customers requires that you develop a relationship with them, garner their trust, and offer products they want. You won’t be able to foster online success with Instagram alone, for example. That’s a good start, but you must support it with a Twitter, Facebook, LinkedIn, Pinterest, and Google+ presence. Putting all the social platforms to work in concert creates a winning online strategy, provided you stick to a topic or theme about which you are knowledgeable. Your goal should be to create a big picture view of what you are trying to accomplish with your export business, and then make sure the right message gets in front of the right people at the right time.
How should business owners handle foreign currency transactions?
Transacting business in multiple currencies spanning several countries might be beneficial to a big operation interested in hedging against currency fluctuations, but for a small business, it can hurt the bottom line if it’s not properly managed. It’s best to negotiate terms in your country’s currency as this transfers the risk to the other party. Use a currency converter to check live foreign exchange rates.
What should small business owners know about shipping products overseas?
It’s best to work with an experienced transport company such as UPS, FedEx or DHL. They have been considered the best in international shipping for a long time. There are also smaller logistic companies that are good, but you’ll need to check them out. You should confirm that the company specializes in the region you will do business in, and can handle fulfillment needs and customer payment collections from customers worldwide.
Where can business owners learn about customs duties and foreign taxes?
A logistics company can assist you with customs duties, and for foreign taxes, you should consult with a good international tax accountant. You should also consult with your accountant about foreign trade zones, and how they might help you reduce or eliminate customs duties.