The ABCs of selling overseas

Published 5:00 pm Thursday, April 30, 2009

But it seems like a giant leap, in more than just miles, to get your products in front of overseas customers. How do you go about making that opportunity happen?

For entrepreneurs interested in expanding to foreign markets, there are plenty of resources available through state government to help business owners get their feet wet in global markets.

Take stock

Dennie Houle is business development officer for the Oregon Economic and Community Development Department. He said business owners should start by taking stock.

“People should start where they are,” he said. “That will determine what the next steps are.”

Houle said it’s not always necessary for entrepreneurs to start from scratch when approaching the ins and outs of selling overseas.

Local networking can be a real asset; area businesses may already be involved in overseas marketing.

“I would suggest that they figure out what other businesses are already selling,” he said. “Find out who is selling something similar [to their product].”

But he cautioned that breaking into overseas markets requires commitment, and recognition that the devil can be in the details – like unfamiliar cultural norms and regulatory ins and outs.

“People need to be prepared to make a long-term investment,” he said, “and a considerable investment.”

Where to start

Dana Shannon is international trade officer for OECDD. He empathizes with entrepreneurs who are marketing overseas for the first time.

“People don’t know where to start asking their questions,” he said. “They don’t know where to make the first point of contact.”

He said a good place to start for small business owners is their local Small Business Development Center, usually affiliated with a community college. SBDC is a program of the U.S. Small Business Administration and offers information and training for entrepreneurs.

“That is where they are going to put you in touch with the right person in the state,” he said. “A lot of people want to go international but they don’t have a plan.”

Shannon repeatedly stressed the value of market research and business planning. He said owners should think proactively.

“If you’re going to go international, outline the different steps and figure out timelines,” he said. “Then start allocating cost to that.”

He said many businesses quit too soon in the process, echoing Houle’s sentiment that cultivating overseas markets takes time. That’s why it’s important for business owners to assess their risk tolerance early on.

“How much can you afford over the next four years to get yourself known?” Shannon said. “International doesn’t happen overnight.”

He said the difficult state of the economy makes it a perfect time to start exploring options. “During this downturn they [business owners] can breathe a little, but they can also plan – ‘how will we move our company forward?’ “

Other important considerations for small businesses contemplating overseas selling include assessing international and domestic competition, determining who is going to be in charge of international efforts within the company, and researching macro and micro markets to zero in on the best opportunities.

The country next door

While most Americans think “across the ocean” when they think of other countries, some of the best trading opportunities are right next door.

“Most people forget that Canada is one of our biggest trading partners,” he said.

Shannon said no licenses are required by the U.S. for domestic businesses seeking to branch out to other countries. But individual nations may have their own regulations and tariffs that can add to the cost of doing business.

Most of all, Shannon said patience is more than a virtue – it’s a necessity in marketing outside the U.S.

“There’s a lot of relationship building in international trade,” he said.

Cultural issues can be a big consideration. Shannon reiterated the idea of doing thorough homework about a nation before you approach entrepreneurs there.

“English is pretty much the international business language,” he said. “But sometimes you may be conversing in English but you have to think about how it is going to be translated in that culture. Study the country. How can you talk to them if you don’t know their history and where they are coming from?”

Embassies are another source of information about a given country or culture, and the companies doing business there.

“There are different ways to learn about a buyer,” Shannon said.

Once the sale is arranged, how does a business facilitate payment when parties are in different countries, with different currencies?

That’s the time to know the ins and outs of international banking, bank-to-bank payment transfers, and currency exchanges.

For more info on international banking, business owners should check out the Export-Import Bank of the United States (Ex-Im Bank).

Ex-Im is the official export credit agency of the United States. The bank’s mission is to assist in financing the export of U.S. goods and services to international markets.

While there can be exceptions, Shannon said generally there’s no substitute for legwork and planning when approaching oversees selling – which means there’s a lot to do before a company ever sets foot on foreign soil.

“When you understand your market and your company’s capabilities for going international,” he said, “then a company can make the decision if they want to make the commitment to being in the international marketplace.”

Six steps to a successful export sale

Assess the market: Evaluate the overall country risk and determine general market conditions, consider micro and macro markets.

Evaluate the product: Determine the effort and costs of selling your product in a foreign market. Consider product modifications to suit an overseas market.

Move your product: How will you distribute your product? Nothing hurts an export operation like bad distribution. Consider direct sales, agents, dealers, trading companies, etc. Consider cost- effective shipping methods – air, rail, ship or overland.

Find qualified buyers who will fulfill a contract: Develop a short list of qualified buyers; assess the ability and performance of potential importers.

Choose the terms of sale: Establish sales and payment terms. Consider price, shipping and sales terms, payment mechanisms, and currency.

Obtain trade financing: Do you need financing support, pre- or post-export? Consider your financial needs. Choose a trade finance bank, and provide the bank with a complete information package.

Source: Dana Edward Shannon, International Trade Officer

Oregon Economic and Community Development Department,

International Trade

Web resources for exporting
U.S. Dept. of Commerce Export Assistance Office, Portland (www.buyusa.gov/Oregon)

U.S. Small Business Administration (www.sba.gov

Oregon Economic and Community Development Department, International Trade (www.oregon4biz.com/it.htm) Washington State Department of Community, Trade & Economic Development (/www.cted.wa.gov/site/150/default.aspx)