Where do businesses that want to expand their operations to an import export business begin? Exactly where they started in the first place, advises Sharon Freeman, president of the Washington, D.C.-based consulting firm, All American Small Business Exporting Association (AASBEA) and author of Exporting, Importing and E-Commerce: A ‘How To’ Guide for Minority, Immigrant, and Women-Owned Firms.
Her most important advice to entrepreneurs wanting to expand their export efforts is to take advantage of the literally billions of dollars the government invests each year in helping them.
The Department of Commerce produces Country Commercial Guides that provide information about the best prospects for selling specific goods to certain markets. So, for example, a country that recently received a loan from the World Bank to retrofit its telecommunications system and is therefore in the market for buying a lot of related products, would be included as a good prospect.
“Utilize this free source where all of the market analysis has been done for you,” Freeman advises.
It’s also important to be aware of countries that pose a risk. The Export-Import Bank does analyses of public and private countries and won’t provide support or insurance for sales to countries that present high levels of risk.
“Let’s say you want to sell something to a country and the banks says it won’t provide coverage over the medium term, which is any time over 12 months, then it’s a risk,” said Freeman. The Country Limitation Schedule is published on the bank’s website.
The U.S. Commercial Service offers a Gold Key Matching Service, to help entrepreneurs locate and screen prospective trade partners, including agents, distributors and sales representatives. The services include customized market and industry briefings with trade specialists, market research, appointments with prospective trade partners in key industry sectors, post-meeting debriefing with trade specialists and assistance in developing appropriate follow-up strategies, and help with travel, accommodations, interpreter service, and clerical support.
Sevilla recommends contacting the U.S. embassies in foreign countries. “They have commercial officers who advocate for our companies, especially SMEs. It’s almost like having a foreign sales force to assist them,” she said. In addition, business owners should sign up for USTR’s electronic newsletter, Trade Talk, to learn about new market opportunities.
Top 10 Dos and Don’t of Running an Import Export Business
- Take international trade classes at the college level
- Visit trade shows and trade missions. See http://www.tsnn.com
- Join an international trade association specializing in your business
- Personally visit your offshore suppliers (or customers)
- Take advantage of online resources such as http://www.sba.gov/oit
- Inspect and approve merchandise before it is shipped
- Consider hiring an international trade consultant
- Become personally familiar with all monetary transactions
- Use a trade lawyer for agent and distributor agreements and licensing requirements
- To begin, start on a very small scale
- Investigate the potential opportunities and benefits of international trade
- Rely on a single source of supply (or customer)
- Have an understanding of intellectual property rights
- Have an understanding of import/export financing
- Learn how your best competitors are handling international trade
- Provide dispute settlement provisions
- Make assumptions as to vendor’s compliance with your specifications
- Check out your suppliers/customers before establishing relationship
- Rely on handshake agreements
- Rely solely on others including employees for importing/exporting expertise