The Dollar's Down: Are You Exporting?
As we traveled around the country on the Back on Track America small-business revival tour sponsored by Amtrak, a lot of business owners said they were nervous about exporting after the September 11 terrorist attacks. They were fearful that intensified scrutiny of packages by customs agents and law enforcement officials both here and abroad would slow down delivery and adversely impact overseas payments.
Well, take another look at your newspaper's business section. September 11 has had another impact on global trade, and this time it's positive for U.S.-based businesses. Thanks largely to fears about a continuing but vague terrorist threat against our country, the U.S. dollar is declining in value against the euro, the yen and other foreign currencies. Now, that may not be good news for interest rates and other economic indicators, but it is good news for U.S. companies that sell or want to sell globally. A falling dollar means U.S. goods become less expensive for overseas buyers.
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If your business has something that will appeal to markets overseas, now is the time to jump in. If you've never exported before, how can you know if there are international markets for your products?
"The first question to ask is 'Are my products selling well locally?' " advises Laurel Delaney, founder of the Chicago-based GlobeTrade.com export consulting firm and author of the book Start & Run a Profitable Exporting Business. But, she cautions, "if your stuff isn't selling here, it's not likely to sell well elsewhere."
If your products are selling well domestically, what's next? "The next question to ask yourself is, if you couldn't read a word of the language on the package, would you know what to do with the product just by looking at it?" Delaney says. "For example, a box of cookies with a colorful photo on the outside of a sturdy cardboard box will be more exportable than a soft bag of cookies without a photo. The cardboard box will hold up better across all transportation channels (truck and boat), and the customer will know what's inside just by looking at the box."
Delaney's free e-mail newsletter, BorderBuster, contains a regular feature on the do's and don'ts of doing business in particular societies and cultures. You can contact Delaney via e-mail at firstname.lastname@example.org.
Delaney says that when selling overseas, there is no substitute for doing your homework. "What happens if the box of cookies without the photo has a long shelf life, but contains a weird ingredient in it that is OK to use in baked goods here but banned overseas? You may find out that you still need to adapt the package and change the product to accommodate the overseas market you plan to sell to."
According to Delaney, it is difficult to sell in any overseas market without local knowledge. "You simply have to have a foreign partner in each country outside the U.S. in which you want to sell--someone who understands the local markets, regulations, taxes and customs."
So, how do you go about finding foreign partners? Directories of overseas buyers can be found at www.export.gov and www.buyusa.com, two Web sites sponsored by the U.S. Commerce Department. Another good site is the U.S. Export Institute's site at www.exportinstitute.com. Delaney says a great way to find partners in a particular country is to call or e-mail the U.S. Embassy there. "They can provide you with lists of local companies that have bulk-purchased the type of things you sell," she says. A list of U.S. Embassies can be found at www.embassyworld.com.
Delaney, who works with many small firms, stresses the importance of dealing with overseas wholesalers and distributors that conduct lots of global trade. "You don't want to sell one box of cookies to mom and pop stores," she advises. "You want to sell in volume and receive one check in return from someone who is creditworthy."
One final note: It's important to make sure that you legally can export your products overseas without a license. While most goods do not need an export license under the federal Export Administration Act, licenses are generally required for high-tech or strategic goods, or goods shipped to certain countries (such as Iran or Libya) where national security or foreign policy controls are important. Even if you are selling goods to a friendly country, you may have to take steps to prevent your overseas buyer from reselling the goods to a restricted country.
If there is even a remote possibility that your products or software may have military applications, you should consult with a lawyer specializing in international trade matters before exporting anywhere. Congress is in the process of rewriting the Export Administration Act, and you will want to know the latest rules. To find an export lawyer in your area, go to the online lawyer directory at www.martindale.com, type in your city and state, and select "international trade" as the area of expertise you wish searched.
Cliff Ennico is host of the PBS television series MoneyHunt and a leading expert on managing growing companies. His advice for small businesses regularly appears on the "Protecting Your Business" channel on the Small Business Television Network at www.sbtv.com. E-mail him at email@example.com.