If David Letterman had a Top Seven List for the world's biggest bloopers related to going global, it would be as follows (drum roll, please):
7."I'm not going to outsource production because no one can possibly duplicate my product, especially not at a lower price." Take a good look at what you make and what you sell. Is it realistic to claim that your product cannot be duplicated at a lower price? Thomas L. Friedman's book The World Is Flat might help you see things differently. In a year or so, you might be saying, "My product is made inexpensively everywhere." Then where will you be?
6."Our product can't compete because tariffs are too high." Get advance information on tariff and tax obligations in the country where you plan to do business. Betsy Shields, president of Park City, Illinois-based Breakaway Technologies, which sells discounted computer equipment, learned this on her first international sale. "I had estimated freight from Japan to be about $10,000," she recalls. "As it turns out, it was $14,000, so I adjusted my profit margins and selling prices downward to remain competitive in the States."
5."I can't afford a trip to visit my first customer." You can't afford not to meet with your customer. Says Ray Smilor, executive director of the Beyster Institute at the University of California, San Diego, "If you want to build an international business, you have to spend some money, get a firsthand sense of the market and talk to your customers, especially your first customer."
4."My product sells well here in the States, so I'm certain it will sell overseas." Always check with either your prospective customer or a foreign consulate to determine sales potential. Just because your perfumes are in demand in the U.S. doesn't mean they will be well-received in a foreign country.
3."I will not make any changes to my product when I start exporting." You must tailor your product to meet the needs of international customers.
2."Now that we have our first interna-tional sale, let's export our product to a bunch of foreign markets." Bad idea. Pick a product and a market. Ignore distractions, channel your energies and define the territory where you're going to play until you get very good at it. Then expand.
1."Hey, we got a sale and the product is on the way." What payment plan did you set up with your customer? Structure the deal so that you are guaranteed to get paid before you release any goods. Ask your banker for help so that you get paid--no ifs, ands or buts.
Laurel Delaney runs GlobeTrade.com and Laurel Delaney.com, Chicago-based firms that specialize in international entrepreneurship. She can be reached at firstname.lastname@example.org.
For reprints and licensing questions, click here.