Growth on a global scale may be both challenging and rewarding. The actions to follow, the pitfalls to avoid, and the fundamentals of exporting and importing are outlined here.
Although the American market for practically everything is vast, many entrepreneurs find it insufficient. The rest of the globe is their oyster for these forward-thinking company entrepreneurs. Going global as an importer-exporter to seek international expansion provides several opportunities. The following are some of the unique benefits that come with effectively expanding globally:
- Existing items and services may have their shelf lives extended by identifying new markets to offer them in.
- You may lessen your reliance on the markets you have established in the United States.
- If seasonal shifts or demand cycles are causing unstable swings in your markets, you may balance out your sales by accessing markets with differing or even countercyclical patterns.
- You may make use of the company’s technologies and know-how.
- Finally, by joining the global economy, you will learn how to compete with international firms—and even go to war with them on their own turf.
Of course, the main reason to go worldwide is to increase your possibilities for development and growth. And there are far too many foreign chances to list them all here—or even in a book far larger than this one. The markets in Canada, Mexico, Europe, and Japan are obvious potential. But it is simply the tip of the iceberg. There are a plethora of other rapidly expanding, less competitive markets.
You may find an opportunity to sell anything anywhere if you spin the globe. Of course, finding the ideal position for you will take more time and effort. This data will help you get started on the project.
Before You Begin, Consider the Following Questions
Experts believe that starting a company in the United States is dangerous enough. But what if your ambitions lead you to present your idea in a foreign country instead?
Wesley Johnston, professor of marketing and head of Georgia State University‘s Center for Business and Industrial Marketing in Atlanta, discusses the aspects that might make or destroy a company’s attempt to expand globally. Here are some crucial questions to consider:
- Will the product be well-received in the target market? Consider the concept of market research. The good news is that most American goods and services are well-received internationally. However, if any of your prospective customers are lactose intolerant, you should avoid creating a restaurant that solely serves cheese pizza, according to Johnston.
- Is your intended audience aware of your product or service? If not, be ready to devote a significant amount of time and money on consumer education. If you are the first to launch a novel and interesting idea, on the other hand, “the product becomes associated with your business brand or chain,” according to Johnston.
- Do you think you would be at ease in that country? You will need a solid grasp of the language and culture since you will most likely have to reside there briefly to run the chain in its early phases.
- What is the state of the infrastructure? Is it possible to acquire lodgings and assistance in a Western-style? What is the state of the roads? Is the quality of your materials guaranteed? What about the hot water’s dependability?
- If you do not receive the results you desire in the first overseas market you are investigating, it is possible that your concept is not bad—it is simply that you choose the incorrect location. Johnston adds, “It is a vast, wide world out there.” “I do not believe there is a single concept that will not succeed someplace.”
Understanding the Importance of Import
Going global comes with a lot of potential, but it also comes with a lot of risks. The game of worldwide growth contains several hazards that domestic-only businesses seldom perceive, from pursuing too many possibilities to being hammered by currency changes. Going worldwide may help you grasp the brass ring of success, but only if you avoid the risks.
You have been waiting for this moment for a long time, and now you are ready to export your goods. So, what is next? Your first item of business should be to learn from the mistakes of those who have gone before you.
Many people have made mistakes, but it does not mean you have to. According to John E. Cleek, program director of the University of Missouri’s Bloch School of Business Administration in Kansas City, the following are some of the most typical exporting blunders.
- Failure to prepare a strategy. “Small firms are especially sensitive to this issue,” Cleek explains, “but bigger organizations are also guilty of the same error.” “It takes significantly longer to recover from issues caused by a lack of preparation than it does to do things correctly the first time.”
- Inquiries are being pursued all across the globe. Just because dozens of nations have shown interest in your product does not indicate you are ready to promote it worldwide. Patience is essential. “Responding to an inquiry from a nation about which you know very little requires discipline,” Cleek explains.
- If it works in America, chances are it will work everywhere. True, but your sales and marketing activities must be tailored to each nation. Do not forget that the marketplace is shaped by cultural variations. Pricing, delivery, payment methods, and packaging are all the same.
- Assuming that all transactions would be conducted in English. Make an effort to learn the local language. “It is the height of arrogance to demand other people to learn our language in order to purchase from us,” Cleek says.
Taking the World by Storm
Doing business all around the globe may seem to be a long-distance from doing business in your own backyard. Every year, though, a large number of small enterprises make the journey. Going global, like most lengthy trips, may be broken down into a number of stages. The six essential stages to becoming global are as follows:
- Begin your international growth campaign by creating an international business strategy to assess your requirements and outline your objectives. Before you begin, you must examine your readiness and commitment to expand worldwide.
- Conduct market research in other countries and locate overseas markets. The Department of Commerce is a great place to learn about global markets for American products and services.
- Examine and choose ways for distributing your goods internationally. You may distribute your goods via a number of methods, including founding company-owned overseas subsidiaries, working with agents, representatives, and distributors, and forming joint ventures.
- Learn how to establish pricing, make agreements, and navigate the legal quagmire that is international trade. Exporting is difficult for company owners that have solely operated in the United States due to cultural, social, legal, and economic barriers.
- Investigate public and private funding options, as well as measures to ensure that you get compensated. Financing is always a challenge, but the government’s focus on growing exports, as well as centuries of financial innovation, have made obtaining money and receiving payment simpler than ever before.
- Move your products to their worldwide market, ensuring that they are packaged and labeled in line with local standards. The globalization of transportation networks helps in this regard, yet rules vary from place to place.
Getting to Know Another Culture
Culture is a significant distinction between conducting business locally and globally. According to Hilka Klinkenberg, the founder of Etiquette International in New York City, only about a quarter of American company operations overseas succeed.
“A lot of it is because Americans do not do their research or believe the rest of the world should conduct business the same way they do,” she adds. To avoid making expensive blunders in international business meetings, Klinkenberg gives the following advice:
- Before you get down to business, establish a connection. She explains, “That means having a small conversation and getting to know one another without [immediately] going into business talks.”
- Do not restrict yourself to a certain amount of time. “Keep [the meeting] as open as possible,” Klinkenberg advises, “since it lends power to your negotiation stance.”
- Do your homework. Learn at least a few tidbits and facts about the nation; it demonstrates that you value the cultural history of your possible mates. Also, familiarize yourself with the fundamental terms of their language.
- Bring your own translator. “The interpreter will have the other person’s [interests] at heart, not yours,” says Klinkenberg if they offer the interpretation.
- Recognize and interpret nonverbal communication. “People believe [body] language is universal,” she explains.
- Dress in a respectful and authoritative manner. This should go without saying. If it isn’t, get a professional image consultant.
Import-Export Bank Financing Assistance
International expansion, like any other development strategy, needs funding. And, when it comes to financing, expanding worldwide necessitates unique talents. The Export-Import Bank of the United States is one of the most common sources of funding for firms growing internationally.
Since 1934, the Export-Import Bank, or Ex-Im Bank, has assisted in the financing of more than $300 billion in international sales of US products and services. The Ex-Im Bank provides working capital loans to American exporters, as well as guarantees loan repayment or offers loans to overseas buyers of American products and services.
It also provides credit insurance to US exporters to safeguard them against nonpayment by international purchasers. To qualify for Ex-Im Bank assistance, your product or service must include at least 50% U.S. content. Except for most military-related items, the bank will fund the export of any sort of commodities or services.
Locating an International Distributor
Finding international business partners might be even more difficult than obtaining money for a worldwide expansion initiative. If you can locate international distributors for your goods, you may simply sell them your items and leave it to them to resale them profitably in their own markets.
Distributors are beneficial since they can provide excellent service to international consumers and are simpler to work with because they normally purchase enough of your goods to build up an inventory.
You may be able to identify a foreign distributor by simply searching for a foreign corporation having a U.S. representation in your native city or state. Trade associations, foreign chambers of business in the United States, and American chambers of commerce abroad are all ideal locations to start looking for a foreign distributor.
When it comes to evaluating a foreign distributor for the first time, international business advisors may be quite helpful. When evaluating a foreign distributor if you prefer to handle the task yourself, check for the following:
- By determining whether you need a stocking or non stocking distributor, you may eliminate numerous overseas distributor possibilities. Larger companies that will commit to acquiring an inventory of your goods are known as stocking distributors.
- If your product necessitates a salesman who is educated about technology and other unique characteristics of the product, you will need a distributor that can supply that kind of sales force.
- A distributor having a track record of selling to the firms or customers who are target markets for your product would be the ideal choice.
- You should pick a distributor who can speak your language well unless you are proficient in the language of the nation you are selling to.
- Your requests for information or services should be met with timely and professional answers. Ensure that your phone calls, faxes, and e-mails are returned promptly and satisfactorily.
- Meet your candidates in person, and acquire and verify references, as usual.
Importing Services and Goods
International commerce entails more than just delivering American goods abroad. In many cases, foreign sources of supply might offer better quality, cheaper cost, or other desirable characteristics than domestic ones. Italian shoes, French wines, and Japanese cameras, for example, are readily accessible in the United States due to their acknowledged excellence over local competitors in certain ways.
Importing does not have to be restricted to only products. Many businesses have developed through inventing new methods to import services. For example, a considerable portion of the data-entry job once performed in the United States is now performed by employees in India and China. The corporations for which this work is being done have essentially imported overseas employees’ data-entry services.
Finding sources of things to import was formerly a difficult task for American importers. However, tremendous advancements in the worldwide telecommunications network have made this effort much easier. Anyone with a computer and a modem may now do Web searches to find suppliers almost anywhere on the planet.
Furthermore, they may connect with those suppliers significantly more readily, quickly, and conveniently than ever before, sharing specs and requests. It should be simple to discover a supplier that can offer you a product created in another nation if you have an idea for importing it. Here are some suggestions for selecting a product source to import:
- Begin by concentrating on nations whose imports to the US are given preferential treatment. For you, this implies cheaper import tariffs and lower costs.
- Contact trade officials at the relevant embassies after you have narrowed down your list of potential providers. They should be able to provide you a list of manufacturers for the things you are looking for.
- Attend international and local trade shows where firms looking to export to the US exhibit.
- Read newspapers and periodicals from the United States and other countries, looking for adverts and stories about things you may wish to import.
The Internet is having a significant influence on how international commerce is done. This has a particularly big influence when it comes to establishing overseas trading partners. You may discover countless connections, databases, chat forums, and other resources for locating items to import and other chances to expand your company overseas on TradeNet, the US government’s online trade-matching service.
Make contact with the firm and begin collecting information after you have found some possible suppliers of items to import. You will want to get product samples and, of course, talk about pricing and payment arrangements. Check the quality of the items carefully; the United States is a sophisticated market, and substandard things that could flourish abroad will be rejected here.
Request references in the same way you would in any other situation when you are looking into a new potential provider. Obtain a recommendation to a firm that has already worked with this provider and contact them to inquire about their services.
When transporting goods across great distances, shipping processes are critical. Although high-value goods may be carried by air, the majority of things are delivered by ship. This often entails months-long transportation durations, with the danger of losing out on market possibilities.
Make sure your supplier knows your delivery needs and that the shipping method you choose is appropriate. Once you are satisfied with the arrangements, have a contract reviewed by an attorney who specializes in international trading.
Why Go Global in the First Place?
International growth is not always the greatest approach to expanding your business. Most small enterprises may nearly forever grow in the United States market. Entering the foreign arena, on the other hand, may safeguard you against local market declines while also greatly increasing your total development potential.
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