Important lessons that can help companies considering exporting – or expanding their exporting programs.
It’s easier than ever to sell a product or service to a buyer in another country. Mega-trade agreements now being negotiated, which will knit together buyers and sellers in the U.S., Asia and Europe and make selling to a customer in Singapore or São Paulo almost as easy as to a customer in Seattle.
If these agreements are enacted, tariff rates will fall further, customs procedures will become even more harmonized, intellectual property will enjoy better protections and markets for American services, such as banking and consulting, will open like never before.
For U.S. companies, the benefits of exporting are plentiful: Exporters tend to be more profitable, fully engage their production capabilities, spread their risks, protect their domestic market, and take advantage of seasonal and other factors that affect demand.
“Exporting is much more than a means to survive technological, political and other disruptions. ”
In my role at the U.S. Commercial Service of the Commerce Department, as part of the team that producers the book Exporters! The Wit and Wisdom of Small Business People Who Sell Globally, I am continually reminded of exporting’s potential. We work with more than 20,000 U.S. companies, mostly small, that sell their goods and services to customers outside the U.S.
Unlike the majority of small-business exporters, the owners and business development managers featured in the book operate businesses that sell to markets in multiple countries. One exporter told us that as a result of his work in building active resale channels in about 125 countries, international revenue now represents roughly 75 percent of his business. “We are a ‘micro-multinational,’ ” he jokes.
In the course of our interviews for the most recent edition of Exporters, we learned seven important lessons that can benefit companies that are considering exporting – or expanding their exporting programs.
Lesson One: Exporting is the key to growth – and maybe survival – for many small businesses.
The owner of a drilling company in Florida told me that during the recession in 2008, “When everything kind of collapsed, I looked at all my parked rigs and said, ‘What am I going to do? Going international became a matter of necessity.”
Another business owner sees its exporting activities in a larger context, as a kind of exporting ecosystem. International sales now represents about 15 percent of his revenue and that share is rising every year. “We’re hiring,” he said, and “we’re keeping other people employed – other people working with trucking, logistics, banking, letters of credit, packaging.”
Lesson Two: Exporting helps companies improve the products and services they sell.
A big benefit of exporting is what exporters learn from their customers. The valuable information customers pass along can include lessons about the technical aspects of selling a product or service in another country; improvements in products, services and business processes; and marketing, strategic planning and managing relationships.
The international sales manager for a large building equipment manufacturer described to me the transformative potential of learning from those with exporting experience. He said the company’s employees continue to bring great ideas back from their travels – ideas that they then apply them throughout the company. For instance, “we simplified our product – right down to our software – so everything is easier to operate, no matter the physical conditions or language spoken,” he said.
Lesson Three: Exporting companies become better at the business fundamentals.
“We get new business because we are unafraid to go to places others may overlook or reject.”
Others win new business by offering service that’s better than the competition’s. As one executive told us, “Customers appreciate how they’re able to deal with the owner of the company.”
The owner of a small manufacturing company, with customers in more than 40 countries, told me that he pursues a simple goal: to produce the best product in the world in his industry. As his reputation has grown, his business has grown from a time “when nobody wanted to deal with us to where we now have daily requests for quotations from all over the world.”
Lesson Four: The world is flat – and competitive.
Many of the successful exporters I spoke to understand that 95 percent of the world’s consumers live outside the U.S. Some of these individuals were born to parents with a global awareness, while others had their eyes opened when they traveled abroad. They know that just selling to the U.S. market could leave them uncompetitive against competitors in other countries who are expanding internationally.
One exporter was especially candid: “The mentality of Americans is to be satisfied with the North American market. That’s just plain shortsighted. Their [foreign] competitors in other markets are making money, and sooner or later they’ll be here, more competitive because of their experience in some of these developing markets. We’re not there (but) the Chinese are there.”
Lesson Five: The U.S. now enjoys a greater advantage in manufacturing.
“The mentality of Americans is to be satisfied with the North American market. That’s just plain shortsighted.”
Another reason these exporters say we’ll likely see more manufacturing returning to the U.S. is that foreign consumers have high regard for U.S. products, design, and service. They’re also willing to pay more for goods that were “Made in the U.S.A.” Executives from the manufacturers featured in the book agreed that the American brand has a cachet that derives from U.S. expertise, experience, and technologies.
Lesson Six: Many immigrant owners have what it takes
Forty-seven percent of the startups in tech-heavy Silicon Valley today are headed by foreign-born entrepreneurs, according to the Kauffman Foundation, a nonprofit research nonprofit firm that studies entrepreneurship. What’s more, many of the foreign-born business owners we talked to for Exporters displayed both the ability to navigate different cultures and a fearlessness when it comes to seeking out opportunities.
One immigrant owner, who embodies the American success story, told us: “We came to this country with very little, but lots of big dreams. We wanted to reinvent ourselves, and we want to be the best we can be so that we are able to export U.S. products overseas.”
Lesson Seven: Government export assistance programs can make valuable connections.
The exporters expressed an overwhelming willingness to work with government agencies at the national and local level. Related to this may be a connection between working with such government programs and the number of markets that the government services users are in.
“ Foreign consumers are willing to pay more for goods that were “Made in the U.S.A.””
“Thirty years ago I called [the U.S. Government],” one manufacturer recalled. “Don’t remember why. It was Telexes then, and the international trade specialist sent a bunch to her colleagues at the embassies. I got inundated with requests from potential buyers – and I got into all kinds of markets.” Those government agencies gave him his first break, he said, and “30 years later I’m still using them.”