take your small business global

An Introduction to Taking Your Small Business

Global

Copywrite 2010 Michael McDermott

804-248-1837 www.SmallBusinessCoachVA.com

Michael McDermott

Author: “2009-2011 Recession Survival Guide – 414 Actions Businesses Can Take to Weather the

Storm and Boost Profits”

804-248-1837www.SmallBusinessCoachVA.com

YOUR HOST & SPEAKER



Drastically reducing expenses and headcount.Eliminating all marketing (oops!)Borrowing on credit cards to finance daily

operations. (ouch!) Looking for a wealthy partner Looking for a bank loan (dreamer) “Borrowing” from your payroll tax account

(DANGER!) Human sacrifice (your banker)

How Is Your Company Reacting to the Recession?



70% of America’s economy depends upon

domestic spending (selling fast food and haircuts

to each other)

But America’s consumers are holding back

spending until the housing market and employment prospects improve



95% of the world’s consumers

are located OUTSIDE of the U.S.

If you’re not selling abroad

it’s time you did!



Less than 1% of America’s small businesses are exporters.

Small businesses account for 30% of all U.S. exports and for the vast majority of growth in new exporters.

More than two thirds of U.S. exporters have fewer than 20 employees.

More than two thirds of SMB (small/medium business) exporters are service companies/non-manufacturers.



President Obama has set a goal of doubling U.S. exports over the next five years with the National Export Initiative.

Expand trade advocacy, especially for small & medium-sized

enterprises. Includes educating U.S. companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests.

Improving access to credit with a focus on small & medium-sized businesses that want to export.

Continuing rigorous enforcement of international trade laws to help remove barriers that prevent U.S. companies from getting free and fair access to foreign markets.

U.S. Government’s 5 Year Export Goals



Last year, 70 million people joined the emerging-market middle class, with incomes between $6,000 and $30,000. 1 billion people are expected to join the middle class by 2020. Growth is coming in China, Brazil and India.



The Chinese bought more cars last year than Americans did

India has as many Internet users

as the U.S



is still as good as gold in most of the world and now the low U.S. dollar means U.S. goods are less expensive to the world.



Construction Design, EngineeringBanking and Financial Services Insurance Computer and Data ServicesCell Phone Apps Technical Processes ImprovementEnvironmental ConsultingTeaching/Educational ServicesLegal and Accounting ServicesCouriers Freight Forwarders or Consolidators Customs Brokers Trade Show Organizers

ExportingNot Just for Manufacturers Anymore



• The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)

• The North American Free Trade Agreement (NAFTA)

Trade agreements have lowered tariffs and removed other obstacles

to exporting and importing:



NOT ChinaChinaMexicoJapanGermany United KingdomSouth KoreaFranceNetherlandsTaiwanBrazil

America’s Largest Trading Partners



Canada (!)ChinaMexicoJapanGermany United KingdomSouth KoreaFranceNetherlandsTaiwanBrazil

America’s Largest Trading Partners



Direct Exporting: overseas sales where the producer or provider controls all of the production, marketing, sales, shipping, etc activities and claims all of the risks and profits.

Indirect Exporting: overseas sales through an intermediary who takes a commission on sales or who purchases the goods and resells. While there may be less of some types of risk, there is also less profit.

Two Basic Types of Exporting



Small and medium-sized businesses don’t always have the financial, technical, human or information resources to engage in traditional

direct exporting…with one exception.



eBay: www.ebay.com http://pages.ebay.com/sellerinformation/growing/international.html

Alibaba: www.alibaba.com is focused upon B2B market and is an English-language website primarily serving Small and Medium-Sized Enterprises (SME's) in the international trade community. One million registered users from over 200 countries. 300,000+ daily visitors including global buyers and importers looking to find and trade with sellers in China and other major manufacturing countries.

Go Global Through eCommerce



Amazon: www.amazon.com Dedicated Website or a TAB on your landing

page for the country you want to market toward.

Virginia Business Pipeline – Virginia based

businesses can post a website, search/post RFP’s and export. www.virginiabusiness.org




U.S. Commercial Service – Featured U.S.

Enterprise (F.U.S.E.). www.buyusa.gov/home/fuse.html , www.export.gov

$150 for a listing in five foreign markets.




F.U.S.E. Listing



Set up your most professional-appearing website FIRST, before you begin to market. Get it translated in the language of your target market.

Start small, test the waters, check out reviews, take advantage of the experience of others by reading blogs; research a lot before you do anything. Caveat emptor.

1/2 of online shoppers abandon their shopping carts (av cost = $109) multiple times due to high shipping costs, security concerns and lack of convenience. Make the checkout experience as painless as possible.

High shipping costs is a major cause of shopping cart abandonment, especially when shipping costs aren’t provided upfront. Almost ½ of online shoppers might have completed their purchases if they had known about those costs earlier in the shopping process.

Do’s & Don’ts with eCommerce



Use a one-stop payment solution with payment by credit card or PayPal, money order, bank account draw. Many customers in China do not use credit cards.

Increase conversions (visitors who actually buy something) with free shipping, coupons and discounts.

Minimize requests for personal and financial information.

Make transactions fast and easy. Make sure your site can be viewed by mobile devices.

In some countries, many potential consumers extensively use handhelds to search the Web.

Do’s & Don’ts with eCommerce



Indirect exporting offers several methods that can take your business global relatively quickly, inexpensively and

without a lot of risk.



Export Management Company/Agent and Export Trading Companies: connects domestic sellers with foreign buyers. The difference is that EMC’s earn a commission on sales while ETC’s purchase from the manufacturer, markup and resell products.

EMC’s are typically industry and

country/region specific. Generally, you need to know where you want to sell in order to track down an EMC for that region. Good EMC’s can be hard to find.

Go Global Through Indirect Exporting



VEDP, www.exportvirginia.org/directory. Contact Mark Myrick, VEDP Trade Manager, 804-545-5755 to help you identify the right country/region to market your goods or services.

Contact the U.S. Export Assistance Center in

Richmond: 804-771-2246, Eric McDonald-Director, http://www.buyusa.gov/virginia/




Federation of International Trade Associations: www.fita.org

Your industry trade association

Your industry marketing publications

Global Export Import Directory




http://globalexport.usaexportimport.com/



Licensing – license a foreign company to manufacture your branded product. This strategy is useful to establish a market presence and generate revenue in foreign markets where there are barriers to direct entry.

Joint-venture required in China and IndiaDrop shipping (a customer purchases merchandise from

YOU but it ships directly from the manufacturer/distributor directly to your customer world-wide).

Hire an employee who has created or worked in a global product or service provider.

Hire a consultant to take your product or service global.Buy a business that is already global.

Even MORE Ways to Go Global



VEDP, Virginia Economic Development Partnership, will perform FREE market research for your product (if you are a VA company). Terri Noll, 804-545-5764. www.exportvirginia.org

U.S. Commercial Service: www.export.gov/mrktresearch/index.asp

How to Market Internationally



Recognize that culture, language, literacy, branding, pricing, competitive positioning, product life cycle, climate conditions and local marketing regulations vary between countries and regions within countries.

Find a drop shipper: Thomas Register, www.mydssd.com ($300 lifetime registration)

Go to international trade shows.

How to Market Internationally



Create an international eCommerce website in a matter of hours and start posting products and services.

“Going Global” through traditional direct exporting (and

avoiding commissions) is not a quick process. It requires preparation and patience but it could be worth the effort. NOW is the time to learn, get acquainted with overseas distributors, practice on a small scale for when the middle class in China, South America and India breaks out over the next 3-5 years.

Take the traditional route and spend a year in the AIM (Accessing International Markets) program through the Virginia Economic Development Partnership.

How Long Does It Take?



AIM Program SummaryAIM is a one-year export program that helps Virginia companies pursue new leads in one target country internationally.

AIM encourages clients to adopt a systematic, proactive approach to the export process which minimizes risks and maximizes returns.

• Must be in business for at least two years in Virginia. • Must employ at least ten full time employees in Virginia. • Must generate at least $1million in annual sales in Virginia. • Must commit to travel to their target market via a VEDP Market Visit during their time in the program. A list of target markets served is at:

http://www.exportvirginia.org/schedule_market_visits.html



AIM Program Summary

$5000 to Offset Export Expenses

Strategic Research & Consultations

Focused Export Training

In-Country Matchmaking Assistance

Private Sector Experts



AIM Program Summary

• The AIM Program accepts 20 clients a year.

• Classes of ten start the first of January & July.

• Applications are due the first of June & December.

• Program details and applications are available online at:

http://www.exportvirginia.org/aim.html



VALET Virginia Leaders in Export Trade

A program targeted at larger, more established companies. Each year 15 qualifying Virginia businesses are selected to participate in a two year program to expand their global marketing efforts. Participant companies are provided with tools and resources to increase their international sales.

On average, graduate companies experience an 88% increase in international sales during and immediately following the program.

For more information, contact VALET Program Manager,

Mario Camardilla at (804) 545-5753



VALET Virginia Leaders in Export Trade

To be considered for participation in the VALET Program applicant companies must be Virginia-based companies with established domestic operations which are committed to international export as an expansion strategy. VALET Program participants must request entry to the program and meet minimum requirements:

• 20 employees • Established 3 years • $2 million in annual sales • $20,000 commitment toward export trade • Participate in one VEDP trade event• Complete international market research



Financing Your Global Business

Always try to finance expansion without going into debt or giving up equity. But if you need financing to expand with a thoroughly researched Export Plan, there are sources.



Financing Your Global Businesshttp://www.business.gov/expand/import-export/exporting/export-financing.html



Financing Your Global Businesshttp://www.exim.gov/smallbiz/index.html



Financing Your Global Businesshttp://www.sba.gov/financialassistance/prospectivelenders/7a/elp/index.html



Financing Your Global Business



Willingness and ability to service after the sale. Potential for lots of frequent flyer miles Patent, copyright, laws are different for each countryGeneral business climate, laws might be more

“flexible” and lax than in the U.S. Everything takes longer to do and requires a lot of

“relationship management”Getting paid; collections Currency price swingsInflation Political instabilityCorruptionGovernment interference

“Issues” Going Global



Where to StartA Basic Guide to Exporting - 10th Edition Now Available!

A Basic Guide to Exporting takes the mystery out of entering the global marketplace! It is a very complete primer for small to medium sized businesses that are contemplating entering the international marketplace or are new to international trade transactions. From finding and developing international markets and customers within those markets through to the actual shipment of the goods to your new foreign customer, A Basic Guide to Exporting will take you step by step! Enhance your knowledge, save yourself time, and increase your chances of success in international business and buy A Basic Guide to Exporting. 254 pages, ISBN# 9780160792045

(about) $18.00www.unzco.com

www.amazon.com



Where to Starthttp://hq-intranet04.ita.doc.gov/bid/export_questionnaire.asp



http://www.exportvirginia.org/



http://www.sba.gov/aboutsba/sbaprograms/internationaltrade/exportlibrary/sbge/OIT_SB_GUIDE_EXPORT_INDEX.html



.www.trade.gov



http://www.business.gov/expand/import-export/exporting/



U.S. Export Assistance Center

Provides export-ready, already established small and medium-sized businesses with local, personalized export assistance by professionals from the U.S. Small Business Administration, the U.S. Department of Commerce, the U.S. Export-Import Bank and other public and private organizations. Try them for sources of Export Management Companies/agents.

Richmond , VA

Eric McDonald - Director

804-771-2246

http://www.buyusa.gov/virginia/



If you can’t export your services, import your customers

Medical tourism into the U.S.

270,000+ foreign students in American schools, many from China and India.

What products or services can you offer that will import customers?



Follow your own supply chain for international contactsMark Myrick, International Trade Manager, VEDP, 804-545-

5755, Banking: BB&T, Wendy Dahl, V.P. International Services

Division, 804-787-1314, [email protected] International Trade Law: Karen Bland, P.C., 757-926-5296,

www.blandlaw.net. Elizabeth Morgan, AIM Manager, VEDP, 804-545-5768, VEDP,

www.exportvirginia.org Virginia International Business Council: www.vaibc.org Michel Zajur, VA Hispanic C of C, 804-378-4099 Dr. Van Wood, Professor of International Business, VCU, 804-

828-1746, [email protected]

The “Go-To” People in Richmondfor Global Business



Export Legal Assistance Network – www.exportlegal.org offers one free initial legal consultation on issues a new exporter will encounter. Sponsored by the Federal Bar Association, Dept. of Commerce and the SBA. Bring your Export Plan!

John M. Huddle, Esq.. CEO & Attorney at LawThe Global Law Group, PLCThe Ironfronts Building1011 East Main Street, Suite 100Richmond, VA 23219Telephone: (804) 788-4480E-mail: [email protected]

The “Go-To” People in Richmondfor Global Business



According to Business Week, most U.S. companies should be getting

one-third to one-half of their revenues from

outside of U.S. borders.

It’s time to go to where the buyers are!



Available from the author:[email protected]

$10.00 (shipping included)



Thank You! Selling products or services internationally is just one way to improve profits. Did you know that 80% of your

profits are influenced by only 20% of your daily activities? Are you focusing on the right activities to increase

profits? Call me for a FREE initial consultation on a “profit tune-up” for your business.

Michael McDermott

Profit Improvement Coaching

804-248-1837

www.SmallBusinessCoachVA.com

take your small business global

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