Once you've chosen a supplier, you're ready to source. Constant communication is a must. "It's super-important to show your face [in the source country]," says Adams. She suggests being in e-mail or phone contact with your suppliers at least once a day.
Typically, your first contracts will be on a per-project basis. Eventually, the relationship can evolve to longer-term contracts, which help insulate entrepreneurs from potential currency fluctuations. Successful entrepreneurs give a steady stream of business to sources they like. "Showing the factory you can capture a lot of orders shows you have a future," says Kushner. "Sometimes you take an order that doesn't make you much money to keep your volume up."
Eventually, something might go wrong. Even the most successful entrepreneurs can have trouble overseas. Sometimes the trouble starts at home. Hooker knows. "Last summer, I shipped a container of Thai triangle-shaped pillows [to the United States]. We brought them in, no problem, at customs," he says. The furniture store that the pillows went to was displaying them in its showroom when someone from the Department of Agriculture saw them. "Turns out, inside these pillows [was] rice straw," says Hooker. Rice straw is banned in the United States. "They impounded all those pillows. We had to give a credit for [them]. It definitely hurt us." Hooker learned his lesson. These days, he studies U.S. customs information so scrupulously that other companies turn to him for advice: He now sources for larger furniture companies, who rely on his Asian expertise. While that may be more than you want to do, putting in some time and effort will make you a foreign expert in your own right.
When Not to Source
The frenzy over sourcing overseas sometimes draws in entrepreneurs who would be better off not buying a plane ticket. Mike Lord, director of the Flow Institute for International Business at Wake Forest University in Winston-Salem, North Carolina, says that before making a move, entrepreneurs should seriously analyze whether they will save money by sourcing abroad.
"Many companies are convinced they have to go to China, but they don't understand that the downsides to moving [production] can outweigh the lower labor costs," he says.
Certain types of businesses are the best prospects for staying in the United States. According to U.S. China Business Solutions, a consulting firm specializing in helping U.S. companies source in China, it doesn't make sense for small and midsize companies to source in China if their initial order will be less than $200,000, given the upfront costs of hiring an agent, setting up shipping, obtaining samples, and making trips to the source country.
Companies that require a high degree of intellectual-property protection might also consider staying close to home. And higher-value items America. "If you're in a business where you make magnetic resonance imaging, and people can't wait weeks for a part to come from China, maybe it doesn't make sense," says Lord. "If you source, you'll have to build up an inventory here, in a warehouse in the U.S., so the item is always available. That could be more expensive than just making it here."
Where to Turn
Here are some resources to help you get started sourcing product overseas:
Federation of International Trade Associations: The Federation of International Trade Associations offers a comprehensive schedule of trade events and conferences, a directory of trade leads from across the globe, an enormous database of other trade-related websites in numerous countries, and meeting boards on which entrepreneurs can find factories overseas.
GlobeTrade.com: GlobeTrade.com is a leading consulting firm for exporters and importers, and a clearinghouse on sourcing products overseas.
Small Business Exporters Association: Part of the National Small Business Association, the SBEA brings together smaller companies with an interest in exporting or participating in global supply chains. The organization also maintains databases of overseas trade leads, offers access to export financing, and helps you prepare applications for government financing for export projects.
Stat-USA: Stat-USA is an excellent clearinghouse of economic and financial data about all foreign countries as well as market analysis of key foreign nations.
U.S. Commercial Service Gold Key Matching Service: Click on "Export Assistant Services." This program arranges pre-screened interviews with potential business partners, agents and distributors in foreign nations. Gold Key also provides market research about various countries and can arrange transportation and translation services for meetings with potential sources.
U.S. Export Assistance Centers: Located in larger U.S. cities, the Commerce Department's Export Assistance Centers provide counseling for businesses considering exporting or importing. They can also inform entrepreneurs about how to obtain the correct documentation for exporting and importing, how to find shippers and other vital details.
Joshua Kurlantzick is a writer in Washington, DC.