It’s believed that 95% of the world’s customers exist outside the United States, and indeed, 70% of the world’s purchasing power exists beyond our borders. Exports have a major impact on the U.S. economy (more than $2 trillion just over five years ago, or nearly 14% of the GDP) and companies that participate in global export are more robust, growing faster while becoming 8.5% less likely to go out of business. You may believe that means only big businesses and corporations can afford that kind of investment, but the truth is, despite the fact that medium and small businesses only represent less than a third of export value, they make up 98% of U.S. exporters.
As we’ve discussed before, becoming a Certified Global Business Professional will help you understand the scope, process, and benefits behind exporting. (Obtaining the CGBP credential is accessible through the CGBP Exam prep program. Below we’ll give you a brief overview of how to get started exporting products globally by selling to customers outside of the United States.
Build Export Capacity
You need to ensure that your business is ready to start exporting globally and if you are not the owner of the company that you have management support. Each of your team members and departments need to be aware and strategically aligned with this new company goal. For instance, your marketing department needs to be in the position to do global market research, understanding consumer preferences, and testing to advertise ahead of your actual entry into the market, or your operations department needs to be prepared for product modifications, expanded production and logistics requirements as well as trade finance, how you will get paid. You ought to have processes in place to ensure that each aspect of your business is prepared to handle the transition and expansion.
Part of this preparation needs to be a SWOT analysis, that is, review your business and potential market for strengths, weaknesses, opportunities, and threats. This will help you recognize the numerous factors involved with making the decision to export and identify pertinent influences. The Department of Commerce offers great resources for learning more about exporting and critical considerations (for instance, legal restrictions, financing, and risk management) for expanding to include it. Similarly, you can access an export readiness assessment from the PCC Global Trade Center.
Making the decision to export isn’t enough, of course. You need to carefully choose your foreign markets, and that means investing in global market research. It can be advantageous to find partners to help you enter these new markets, such as distributors. They can also help get you into trade shows so you can network within that market as well. With research and networking in hand, you can put together a strong strategy for penetrating the market, including the localization of services, pricing and budgeting, developing promotions, and organizing distribution.
Remember the resources offered by the Department of Commerce and that there’s assistance available from the OSBDCN Global Trade Center at Portland Community College. You don’t need to navigate finding and evaluating foreign representatives and buyers, understand free trade agreements, evaluate market research, or anything else completely on your own.
Understanding Methods of Payment
It’s important to understand that language can vary between nations, and even when the same terms are used, it doesn’t necessarily mean the same thing. Become familiar with Incoterms, or international commercial terms, that are specifically utilized to avoid confusion and ensure that every party understands their contractual obligations. Using incoterms will make it clear to your partners and clients how and when they need to make payments.
Then you need to know how you plan to ensure you get paid. As you might imagine, payment in advance is best for you but isn’t as attractive for the business at the other end of your deal. Fortunately, there are some methods to manage the financial risk for you. For instance, the U.S. Export-Import Bank helps mitigate the risk of nonpayment with a variety of insurance policies, including the Small Business Export Credit Insurance Policy. Alternately, you can work with commercial banks to utilize export factoring (open account insurance for short-term accounts receivable of goods and services) or forfaiting (an importer paying the exporter immediately and taking on all risk associated with the buyer’s ability to pay).
Logistics and Supply Chain Management
Payment is only meaningful if you can deliver. You need to secure your logistics both with transporting internationally and delivering within the market of choice. It’s critical that you comply with U.S. trade regulations, the regulations of the destination country, and any governing bodies that you will operate under in between. Part of this is having all the correct documentation, such as the Certificate of Origin, which may have specific notarization requirements or require secondary documents per Free Trade Agreements.
With a real idea about how to get started exporting products globally, you can decide whether or not your business is suited to global export projects. For more in-depth understanding, enroll in the certified global business professional training course at PCC CLIMB’s Small Business Development Center. It helps develop skills in global management, marketing, supply, and finance, and ultimately prepares you for the certification test that grants a NASBITE CGBP designation that’s recognized by the Department of Commerce.