Foreign markets offer companies the potential for growth and stability through market diversification and an expanded customer base. Despite the misconception that exporting is only for large, global corporations, small and medium-sized enterprises (SMEs) make up the majority of U.S. exporters.
Exports account for roughly 13 percent of the United States’ GDP, with SMEs (companies with fewer than 500 employees) making up 98 percent of the total number of exporters. When you consider that a growing 70 percent of the world’s purchasing power is outside the United States, it makes sense to provide products and services abroad, regardless of your company’s size. Small and medium-sized businesses make up the majority of U.S. exporters.
Small and medium-sized businesses make up the majority of U.S. exporters.
A Bevy of Challenges
That said, conducting business abroad can be a daunting challenge for SMEs. Unlike large corporations, which can employ entire departments to cover foreign markets, smaller companies are often unable to assume the risk of starting such an operation entirely in-house. Moreover, the prospect of providing goods and services overseas comes with layers of problems to solve. Companies must conduct research on distribution networks, find foreign partners and gauge market potential. Then there are myriad issues related to regulations, tariffs and customs to resolve. As a result, smaller companies often forsake exporting altogether — and miss out on new sources of revenue.
An Excellent Resource: The U.S. Commercial Service
Luckily, there are a range of consulting options for your company if it needs help with exports. Private options include seminars on global business, customizable market research and assistance with customs regulations. But in addition to providing a wide range of services, consultants offer their counsel at various price points. This makes it difficult to assess the comparative value of one consultancy over another.
One option combines the validity of a government agency with the competency of competitive consultancy, however: the Department of Commerce’s Commercial Service (CS).
The CS’s clout is twofold. There are a range of consulting options available if your company needs help becoming an exporter.
There are a range of consulting options available if your company needs help becoming an exporter.
First is its legitimacy as an agency within the United States government. Many foreign businesses have interacted with the U.S. government or at the very least know and respect its propensity to follow normative structures and its considerable clout internationally. In contrast, a small consultancy may not be able to get a seat at the table with a foreign distributor. Second, the CS is evaluated and funded (partially by fees charged) based on its ability to promote trade abroad. The result is an agency wholly focused on trade promotion. By its own account, for every dollar the agency receives in federal funding, $215 is generated in exports.
The trade promotion wing of the Department of Commerce’s International Trade Administration (ITA), the CS employs thousands in 108 domestic offices and operates more than 100 offices in 70 countries. Companies interested in exporting abroad can contact a local office in most sizable cities, which will then connect them with international offices in embassies around the world. Companies can go online to export.gov to find their local office and to find out more about the services available.
Ways the CS and ITA can help:
- Market Research. The ITA provides free data on exports and imports to the United States. Its website, TradeStats Express, allows users to access and manipulate a range of data down to the state level. And for a fee, the CS provides customized market research on a specific market. A trade specialist provides a report gauging sales potential, identifying competitors and similar products/services, and advising on customs and border regulations.
A growing 70% of the world’s purchasing power is outside the United States.
- Due Diligence Reports. For a fee, the CS conducts international company profiles in over 80 countries. This service includes a detailed credit report, financial and leadership information, sales and profitability assessments, and an assessment of any liabilities. Obtaining this kind of report is a key step before you consider business partnerships.
- Advertising and Promotions. One option for promoting your business is to join the CS’s online directory, FUSE, or in the free Export Yellow Pages; another is to participate in an U.S.-sponsored trade fair or exhibition. These fairs are often good opportunities to find partners that are actively searching for foreign partnerships. The CS also helps to organize promotional events (“from product launches to technical seminars to cocktail receptions”).
- Gold and Platinum Key Services. The Gold Key service is the flagship of the CS. It combines in-depth market research with pre-screened introductions with potential distributors, sales-representatives or partners. In addition, a trade specialist helps with entry strategy and advises U.S. companies during and after the meetings. The Platinum Key service is the longer-term option; there, the CS provides substantial support with market entry plans.
- Advocacy and Dispute Resolution. The ITA is highly influential in helping companies overcome trade barriers, intellectual property violations and customs problems. For example, it can leverage foreign governments when payment disputes and other legal negotiations fail. The ITA also advocates on behalf of companies seeking foreign procurements or projects.
- Publicly Available Information. In addition to the services listed above, export.gov provides numerous free services, as well as information, to companies seeking to export. For instance, it provides an array of online courses, webinars and assessments.
Taking advantage of international markets can be a great thing for your business, but, as you can see, it can also be difficult to accomplish.