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Ready to Export? Proceed With Care

Entrepreneurs need not be daunted by selling one’s product outside the U.S. Here’s how to get started.

Wall Street investor Peter Lynch famously said that individuals spend more time researching the purchase of a refrigerator than a stock. Some entrepreneurs fall into a similar trap when planning their export strategy.

In their eagerness to grow the business, CEOs of small or midsize firms might jump at the chance to sell products or services abroad without conducting the proper due diligence.They’ll devote long hours to, say, crafting a local radio or print ad while plunging into exports headfirst.

What’s more, the allure of foreign expansion can trump more mundane but vital considerations such as analyzing demographic data in overseas markets, enlisting trustworthy partners and weighing options for international distribution.

“Some people get ideas that don’t make sense,” says Ken Weiss, president of Plans and Solutions, a marketing consulting firm in Derwood, Md. “I tell them, ‘Let’s step back.’ A little research is a good idea.”

Author of “Building an Import/Export Business,” Weiss offers three steps to streamline the process:

1) Review global trade data to identify countries with a growing market for importing what you sell. If you select a country with four or five years of steadily growing demand for your product, then “you don’t need to push aside another competitor” to grab market share, Weiss says.

2) Assess market segmentation within your target country. Research customers’ attitudes toward what you sell along with their income level and buying patterns. Study how other successful exporters have appealed to that country’s consumers.

3) Engage in logistical planning. Project the cost to get your product into the hands of foreign buyers. Consider transportation, insurance and warehousing. Scrutinize U.S. export regulations and your target country’s import rules.

Recruit the Right Team

If your analysis bears fruit, the next step is finding reputable partners. Examples include banks, freight forwarders, distributors, suppliers and insurers.

Banks, which serve as intermediaries for international transactions, hold funds until both buyer and seller are satisfied. They also issue lines of credit.

Find a large global bank with a strong presence in both the U.S. and the country where you’re exporting. That way, you gain access to its network of foreign advisors and economists with expertise in trade financing and currency fluctuations. They can highlight trends affecting the consumers that you seek to attract.

Freight forwarders handle shipping and logistics. Think of them as travel agents for freight. They move your products where you want them to go and navigate the thicket of paperwork that accompanies global transport.

“Shop around to see who has the most traffic on routes to your foreign market,” says Barney Lehrer, vice president of FITA Online, an association for international trade based in Reston, Va. “The most experienced freight forwarders offer the best rates and know how to speed your goods through customs.”

Outsource Your Exporting

Lay the groundwork to export by expanding domestically. This can help you iron out kinks in your manufacturing and distribution systems so that you proceed more seamlessly as you cross the ocean.

“Expanding within the U.S. is much easier than exporting,” says John Spiers, an international trade consultant in Seattle. “Start-up exporters get into all kinds of jams like not knowing whom to sell to or assuming that another country has the same laws as the U.S.”

If you’re daunted by the prospect of mastering the intricacies of exporting, you can outsource it. An export management company (EMC) in the U.S. will buy your goods and sell them overseas.

“Selling to an EMC is like another domestic sale for your company,” says Spiers, author of “How Small Business Trades Worldwide.”

As a result, you can enter foreign markets without incurring the risks of direct exporting. EMCs typically don’t impose an upfront fee for their services, but they earn a commission on foreign sales. They also may want you to help pay for foreign trade shows or advertising.

“A disadvantage of using EMCs is the price of your products will be higher to the ultimate customer,” Lehrer says. “That could lead to fewer sales.”

Because the best EMCs work closely with foreign agents and distributors, they can give you a clear-eyed view of what sells in a given market. Heeding their advice, along with the input of global bankers who do business in your target country, helps you develop a sound export strategy based on informed decisions.

Tips and Tools for Exporters

Government

U.S. Department of Commerce International Trade Administration (www.trade.gov) offers industry-specific data and analysis related to exports.

U.S. Commercial Service, the International Trade Administration’s trade promotion arm, uses www.export.gov as the federal government’s export promotion and finance portal. This website, which includes market research, trade leads and webinars on how to export, is a good starting point.

U.S. International Trade Commission (www.usitc.gov) provides tariff and trade data.

U.S. Census Bureau (www.census.gov/indicator/www/ustrade.html) tracks U.S. export volume and other statistics.

Professional Associations

American Association of Exporters and Importers (www.aaei.org), a membership organization in Washington, D.C., provides links to country-specific customs regulations and an index to free trade agreements.

Federation of International Trade Associations (www.fita.org). Another useful starting point for education and research, this comprehensive portal includes country profiles and resource lists ranging from shipping carriers to law firms.

In September 2010, FITA launches www.globaltrade.net with a database of international trade service providers and a list of articles, videos and events related to international trade.

Books

Import/Export for Dummies by John Capela

International Logistics: The Management of International Trade Operations by Pierre David

Export/Import Procedures and Documentation by Thomas Johnson

Other

Economist Intelligence Unit (www.eiu.com), part of The Economist subscription services (fee required), produces analysis and forecasts for more than 200 countries.

Expeditors International of Washington Inc. (www.expeditors.com), a provider of logistics services headquartered in Seattle, offers online currency tools, regulatory updates and a “dimensional calculator” for measuring international shipments.

Based in Auburn, Ala., Ludwig von Mises Institute (http://mises.org) provides information on the global economy. From the homepage, click on “Markets & Data” for international trade data.

Morey Stettner is the editor of Managing People at Work and the author of five business books, including Skills for New Managers (McGraw-Hill). Based in Portsmouth, N.H., he coaches executives on their communication skills.

About morey stettner

Morey Stettner is the editor of Managing People at Work and the author of five business books, including Skills for New Managers (McGraw-Hill). Based in Portsmouth, N.H., he coaches executives on their communication skills.