Small business exporters have a significant advantage over their non-exporting competitors.
But exporting isn't as easy as it sounds. To do it right, you'll need all the help you can get. Here are a few tips to get you started.
Exporters need to address a laundry list of concerns before they can begin shipping their products abroad. Despite the seemingly endless number of details demanding your attention, the identification of suitable foreign markets and export markets should be at the top of your list. Without the right markets and the right partners, your export activities are going nowhere – regardless of your how accurately you have complied with regulatory requirements.
The key to market identification is to isolate a handful of foreign markets based on their current and future market potential. In other words, you need to come up with an objective estimate of how much of your product you will be able to sell in your target countries, keeping in mind that market conditions could fluctuate with changing political or economic conditions.
The U.S. government has a stake in the successful export of American goods and services, and provides several resources to help you identify the most viable markets for your products. The Department of Commerce's International Trade Administration is a treasure trove of information for exporters. Their resources include trade-related documents, product specific market research, trade statistics, and other tools you will need to determine the feasibility of potential foreign markets.
The real advantage of the Commerce Department's resources is that they are based on field data gleaned by more than 2,500 trade experts located in 70+ countries around the world. Their expertise comes from frontline involvement rather than secondhand knowledge, so you can be reasonably assured that the research data is good.
Agent & Distributor Identification
The majority of small businesses employ agents or distributors to sell their products abroad, at least during the initial stages of exporting. Although they are similar, agents and distributors serve different functions. An agent is enlisted to sell your products for you, receiving a commission on the sale. A distributor, on the other hand, purchases your products outright and then resells them in the foreign market.
There are advantages and disadvantages in working with both agents and distributors. The exporter can exert a greater level of control over agents because ownership of the inventory is retained by the manufacturer. However, distributors eliminate inventory overhead expenses in the target country.
Your relationships with agents and distributors are critical, so don't jump on the first opportunity you encounter. Make connections with agent and distributor candidates through trade shows or other venues sponsored by legitimate organizations like the Department of Commerce. Then thoroughly research them by conducting background checks and verifying references. But since even the most highly-credentialed agent or distributor may not be a good fit for your business, avoid signing a long-term contract until after you have had the chance to test the waters with a few trial shipments.