Tip: Taking Your Business Global
Tip of the Month
Tip: Taking Your Business Global
According to a recent survey taken by the Hong Kong Shanghai Banking Corp., 40 percent of small businesses worldwide want to be trading internationally by 2013. Firms both large and small are daunted by the linguistic and logistical challenges involved in international trade, so the prospect of going global has remained a pipe dream for many. The United States lags behind other developed countries in exports – estimates suggest that less than 1 percent of all 30 million U.S. companies export goods overseas. Small businesses make up more than 70 percent of U.S. exporters, and their goods represent approximately 14 percent of the value of all goods exported. In the international arena, small businesses have some advantages that the big guys don’t have – including the flexibility and willingness to embrace new technology to reach and service customers.
Is global business right for you? The decision to launch a global marketing effort needs careful thought. It must be compatible with your overall business plan and your growth strategy. Here are some basic issues and questions to consider.
- Define your major objectives for tackling overseas marketing, which might include:
- Improving profitability
- Capitalizing upon the pending launch of a unique new product or service
- Leveraging a special window of opportunity, such as a major international event
- Maintaining or improving growth rates
- Do you have the staff skills and other resources required to support international marketing efforts?
- Are you able to research the new international market(s) thoroughly, identifying key markets and possible customers, determining budget needs and assessing overall risks?
- What special skills (languages, previous experience, existing business/family contacts etc.) do you have?
- Are senior executives (and travel budgets) available to make trips to the overseas markets? And how much face time will be needed at startup – and then later on to maintain relationships when the business is more established?
- Are you prepared to customize your products and/or adapt marketing efforts?
- Adopt the Harmonized Commodity Description and Codingsystem if you plan to use a foreign distributor. It will help you easily read trade data to see which countries are exporting or importing certain products.
- Attend industry trade shows to identify and meet foreign importers.
- Can your product(s) be modified to suit local customers (e.g. packaging size and style; meet metric standards)?
- In many countries (especially Asia and the Middle East), relationships are critical to success – and there are no shortcuts. It takes time. Get to know local protocol and business etiquette – it is important to know how to greet potential business partners and learn the rules of business dining. Some cultures like Japan’s are much more formal than the United States, and it’s import ant to observe the correct protocols and chain-of-command.
Retail businesses might want to take a look at Export Now, a new e-commerce venture designed specifically to help U.S. businesses access consumer markets in China. Founded by a former U.S. ambassador and under secretary of Commerce for International Trade, this e-commerce solution for small businesses distributes subscribers’ goods via its online store and Taobao.com, China’s largest business-to-consumer platform.
Closer to home, the administration is supporting export efforts. Thanks to President Obama’s National Export Initiative, the International Trade Administration at the Commerce Department has more funding for export programs. The president also has called on the Export-Import Bank of the United States to increase available financing for small businesses by 50 percent. In addition to helping business owners find capital, the Small Business Administration provides training and expert counseling to small firms. Public sector agencies have also ramped up efforts to simplify the requirements business owners must meet and will help businesses identify overseas markets and customers.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.