International Market Sizzles More small companies are finding new markets, but global-savvy business owners urge caution. By Sally Huggins
Delving into international trade is becoming important for small companies that want to expand their markets.
But tread carefully. Local companies with international experience urge caution for those thinking about entering the global arena. Before jumping across national borders, do your homework and be aware of governmental requirements both from the countries you want to trade with and the United States.
Roger Scarbrough, CEO of Scarbrough International Ltd., started as a customs broker helping companies clear their products through U.S. Customs. His business has evolved into a warehouse and transportation company shipping all over the world. He urges caution when companies are looking to enter international markets.
"I wish I had a dollar for everyone who thought they had a good deal overseas," Scarbrough said. "Make sure you know all the charges and the rules before you do it."
The U.S. Commercial Service, a division of the U.S. Department of Commerce, is available to assist companies with exporting. Regina Heise, director of the Commercial Service in Kansas City, said the service can help companies with the rules, regulations, documentation requirements and labeling requirements to comply with both U.S. export rules and the regulations in the country to which they are exporting.
The primary issue to resolve before you start international trade is whether your product is valuable overseas and, if so, where the market exists, Heise said. Completing the online questionnaire at www.export.gov, the U.S. government's export portal, can be very helpful. Click on "Export Basics," then "Are You Ready?" to access the online questionnaire.
"There are some questions you need to ask yourself before you start exporting," Heise said. "Once those questions are answered, then you do the market research on different countries to see where there might be a good place to start exporting."
Companies should ask whether they have a product or service that has been sold successfully domestically, because that is a prime indicator of possible success overseas, Heise said. She said whether a company has sold the product successfully in the United States for a couple of years is a prime indicator of whether they will be successful overseas. The company also needs an international marketing plan as part of its growth strategy. Finally, the company needs to have management support to committing staff, time and money to the process, she said.
Resources Jenni Grisso, director of retail brands at Knit-Rite Inc. of Kansas City, Kan., strongly urges small businesses considering international trade to work with the Commercial Service.
"They are the best equipped to consult, guide and evaluate how to sell your goods or services and who to sell them to," she said. Knit-Rite, which has been exporting its prosthetic and orthotic socks for about fifteen years, recently received the Export Achievement Certificate from the U.S. Department of Commerce. The certificate recognizes small or medium-sized enterprises that have successfully entered the international marketplace for the first time or expanded into a new market.
While the Commercial Service has an office in Kansas City, most of its work is done on-site at businesses. Resources are not available in the office for people to come in and browse, Heise said. She also makes presentations to groups, and will participate in a symposium at Johnson County Community College Oct. 24 on government resources for international trade.
Ed Gerson, CEO of Certified Safety, said the Commercial Service and the Greater Kansas City Chamber of Commerce World Trade Center were excellent resources for his company-both for getting into markets and for promoting them to international visitors looking for U.S. products and services.
Another avenue to enter the international trade arena is to participate in international trade shows. Certified Safety and Knit-Rite both have found several markets through the shows.
"International tradeshows are a great resource for exposure, where you have the opportunity to meet potential customers face-to-face," Grisso said.
Develop a Plan First and foremost, a company needs to have a product to export and an international marketing plan-including potential markets for exports. In the Midwest, global exports continue to grow each year, said Phil Watlington, author of The World Is At Your Door. This growth means that having an international strategic marketing plan is no longer just optional.
"To survive and prosper in today's increasingly competitive environment, small businesses must organize, plan and execute a marketing strategy based on a global mindset that takes into account the fact that competition and commercial transactions no longer stop at U.S. borders," he said. Angela Stuppy, international sales manager for Stuppy Greenhouse Manufacturing in Kansas City, Mo., urged companies to take the time for market research before attempting to market globally.
She suggests that companies thinking about international sales do market research and make sure their product is adequate for the market they are going to enter.
"When you are trying to break into an international market, especially as a small company, your marketing strategies have to be good because you don't have a budget that allows you to throw a lot of money to get name recognition," Stuppy said.
Resources are available from the U.S. Commercial Service, as well as www.export.gov, to develop a marketing plan.
"Once you determine what you want to export, then you can come to us and we can help you through the initial phases. We can help identify markets, the best strategy in that market and the best way to market there," Heise said.
Opens New Markets A prime reason to get involved in international trade is that it opens new markets with the potential to dramatically increase sales.
"If you're successful in the United States and it's a good product, there is probably a need for it somewhere in the world," said Scarbrough. "There is tremendous opportunity to increase sales and increase markets. For many companies, the way to expand their business is into new and emerging markets."
Major markets for U.S. products are South America, India and China, he said.
For Certified Safety, the whole world is its market, including Kuwait, South America, Canada, South Korea, Russia and Guam, Gerson said. The company supplies the safety kits for the Jordanian airline and for school buses in Canada and Mexico. The Far East is an especially good market now because American products are in demand there, Gerson said. The company also is working to get its products registered for sale in the European Union, where the number of regulations can slow down initial entry into the market, he said.
Knit-Rite exports to Norway, Germany, Canada, Turkey, Greece and Lebanon, Grisso said.
"Suddenly the world is your playground and many more markets and customers are open to buying your products," she said.
But finding the right market for your product is essential. And, the product you sell domestically may not be exactly right for the overseas market.
"You have to identify the customer's need. It will be different in different marketplaces around the world. You may need to modify whatever you are offering in products or services for that country," said Dan Ward, executive vice president at Western Forms in Kansas City, Mo.
Different countries have different regulations for products or the use of the product may vary from country to country, requiring changes. For example an electrical appliance may need a different style plug than what is used in the U.S.
Stuppy Greenhouse, which produces climate controlled commercial greenhouses for vegetable production, saw its export trade decrease when it didn't have the right products for the changing market, Stuppy said. But now the company is rebounding.
Percentage of Sales "We are trying to get export sales to 30 percent. Some years we are close," Stuppy said. "The focus of our business development is Mexico. There is lots of growth in Mexico in the greenhouse market."
The company began exporting in the 1980s in very small amounts, she said. Sales increased substantially in the 1990s, before tapering off because of economics, as well as not having quite the right match of products for the market. Stuppy's job has been focused on international sales since last year.
Western Forms, which sells aluminum forms for concrete construction, got into the international market in 1974 following an earthquake in Nicaragua. A homebuilder there needed assistance with rebuilding in the damaged country and sought out the company, Ward said. Through the years, the company has grown substantially, going from 10 percent of its business in international sales to 30-50 percent today-depending on the time period.
For Certified Safety, international sales are expected to be 2 percent of its gross sales, but the goal is to reach 10 percent next year, Gerson said. "We are making a lot of noise. We are very competitive. We won't be the cheapest, but we will be the best quality you'll get," he said.
The company started exporting in 1992 when a company from Russia requested its product. In 2004, the U.S. Department of Commerce recognized Certified Safety as exporter of the year in Missouri for the quality and aggressiveness of its overseas sales.
Knit-Rite, which began exporting in 2003, initially found the paperwork to be overwhelming, but through assistance from the Commercial Service and international tradeshow exposure, international sales are increasing, Grisso said. They make up about 5 percent of gross sales now, she said.
Internet Leads to International Sales Small companies today may find themselves inadvertently involved with international sales through their online presence. More than 75 percent of small businesses are engaged in some form of Web-based marketing, which means that consumers around the world have access to their products and services, said Watlington.
But companies need to be cautious when proceeding with international online sales. The same regulations apply for online sales as to exporting, Heise said. There may be taxation implications once a company reaches a certain threshold in sales in a country. And in some countries, it is not safe to accept credit cards because fraud is rampant, she added.
For companies dabbling in international sales through the Internet, www.export.gov has an online selling guide.
Contacts With Embassies The Commercial Service works with embassies around the world to bring the latest information on export/import issues in countries around the world to the local businesses, Heise said. Kansas and Missouri also have trade offices in some foreign countries.
"The world is so much smaller than it used to be," said Scarbrough. "We have a lot of trade agreements with countries now, that before it was difficult to send products to. The number of businesses engaged in international trade is growing rapidly."
Watlington said globalization and the communications technology of the Internet are allowing small businesses access to virtually all markets and consumers.
"This access is driving a world-wide revolutionary growth in e-commerce. Last year's retail Internet transactions totaled about $170 billion and the online population of buyers and sellers is growing at 8 to 10% annually. The best news is that businesses of all sizes can now reach out to the world and take advantage of these global opportunities-right from their local Internet connection."
Even language does not have to be an issue. Scarbrough said being able to speak a customer's language can be very helpful, but isn't essential.
"We are so fortunate because English is the business language of the world. People that you deal with will speak English. We have brokers all over the world and they all speak English," he said.
With the resources available locally and on the Web, and some careful planning, any small business has the potential to dip its toe into international waters.
Resources to Help Companies With Global Trade
U.S. Commercial Service Export Assistance Center, (816) 421-1932, www.export.gov. Greater Kansas City Chamber of Commerce World Trade Center, (816) 374-5483, www.kcchamber.com/kctrade. Missouri Department of Economic Development, Business and Community Services, International Trade and Investment, (800) 523-1434, www.ded.missouri.gov. Kansas Department of Commerce, (785) 296-5263, www.kansascommerce.com (trade development). In Kansas City, Nathalie Scharf, International Trade Representative, (913) 345-8072,
