Exporting raises challenges for small businesses.
The potential new markets that small businesses can access through exporting can prove worthy of the extra legwork it requires. — ijeab/Getty Images

The decision to become an exporter is a big one for any sized business. Selling product across borders comes with potential for increased profit but it also comes with a unique set of challenges. For many American small businesses, the profit potential has outweighed the risks. In fact, between 2016 and 2018, revenue growth for small businesses that export was 10% greater than that of non-exporters, according to a recent report by Google and the U.S. Chamber of Commerce.

If you’re considering exporting product, here are some basics to get you started.

What product should I export?

A better question is, what product (or service) am I allowed to export? The answer is: almost anything, with some exceptions. There are circumstances in which an item, its destination country or its intended use require an export license. On rare occasions, some combination of those factors may prohibit a sale altogether. Rare or not, it is your responsibility as the exporter to stay on the right side of regulations.

The Legal Considerations section of Export.gov is a great place to research export licensing requirements, as is the U.S. Department of Commerce’s Bureau of Industry and Security. The time this research requires is well spent. It’s important to base your future decisions about exporting on facts rather than assumptions.

Another consideration when choosing a foreign market is the safety of your intellectual property. Innovation comes at considerable expense and, for some companies, IP is their most valuable asset. U.S. copyrights, trademarks and patents are not always honored abroad. Help in evaluating the threat and formulating a plan to protect IP is available at Export.gov and at STOPfakes.gov. Again, research in advance can save money and heartache. All products are not equal when it comes to launching an export sales offensive.

[Read: Everything You Need to Know About Intellectual Property]

What country should I export to?

Once you’ve decided it’s legal and safe to sell a product or service outside the United States, it’s time to choose a market. The demand for your product may be universal, but the challenge of getting it into consumers’ hands change with the geography. Distance, tariffs and taxes (yes, they are two different things) and local regulations should all factor into your market decision.

For companies doing business overseas for the first time, the path of least resistance might be a good choice. The United States has 14 Free Trade Agreements (FTAs) in place, covering business transactions in 20 countries. FTAs are written specifically to make exporting easier. They reduce or eliminate tariffs and support the enforcement of U.S.-held intellectual property rights. A list of current FTAs is available at Export.gov along with links to tariff tools and informative videos.

Selling product across borders comes with potential for increased profit but it also comes with a unique set of challenges.

Can a small business be competitive overseas?

Few factors used to determine what market to enter will be more important than demand and price. Here are some questions to ask yourself:

  • How much are potential competitors charging for the same product?
  • If your product is new to the market, will you be spending time and money convincing foreign customers they need something they previously lived without?
  • Conversely, if what you’re selling is well known, will your competitors’ name recognition be a stumbling block?
  • Do local players have established relationships and lower transportation costs?
  • How do your potential customers currently shop? Brick and mortar, computer, smartphone?
  • How receptive are they to new players?
  • How will you provide support and handle returns, and will these issues blow up your profits?

Inside information about your target market would be immensely helpful and there is plenty available. The U.S. Commercial Service, for example, offers customized market research. At Export.gov, you can start the process of connecting with an international trade professional. Located at over 100 local offices, these experts know the ins and outs of specific markets. Their goal is to help you crack the code.

[Read: How to Conduct a Market Analysis]

How can a small business reach foreign consumers?

Your small business can take advantage of bigger e-commerce companies like Amazon to ease itself into new markets. By leveraging the online behemoth’s name recognition, your company can avoid the time and money involved in creating its own. EBay and Etsy are also eager to assist sellers looking to go international. They offer advice on listing, collecting and shipping overseas. This could be the solution when the goal is as simple as getting product introduced into a new market.

You can also open a website in one or more foreign countries. If that’s a viable option, Google’s Market Finder is a good place to start. As the name implies, Market Finder will walk you through identifying a target market and setting up a strategy to take it by storm.

How will I ship my product overseas?

For some products and destinations, shipping is just one more detail—no more challenging than choosing a market or attracting a customer. For others, the physical act of getting the product to the end user has the potential to render a transaction—or an entire company—unprofitable. If shipment takes too long, if product gets damaged, if the cost of freight makes you non-competitive, your business’s foray into exporting could be short-lived or worse.

The best way to understand the shipping of your particular product into your chosen market is to do research with the help of a partner. Start at the websites of the U.S. Postal Service, a fulfillment company like Amazon’s FBA or a third-party shipper like DHL or FedEx. These entities have information—and in some cases, chat features—available to help. Remember, your success as an exporter is a big deal to them. Take advantage of the tools they offer.

Is exporting really a good move for a small business?

In the end, only you have that answer. There are potential pitfalls to be sure. There are language barriers and foreign exchange rates to consider. Unexpected weather disasters happen, as does political upheaval. The rules of the game—tariffs, for example—can change without warning.

Exporting means acquiring a new skill set, taking some risks, attending to details. If you decide to make the leap, take advantage of the tools available. Start small. Take the world by little storms, one market at a time. If you’re still not sure about cross-border selling, consider that 95% of the world’s consumers live outside the United States. Maybe for your small business, that statistic will make exporting a risk worth taking.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published January 14, 2020