What to Know Before You Export
Small businesses need better education, access to finances and forward thinking to begin exporting products to overseas markets.
Selling to the Japanese consumer market was not part of Chris and Tim Guill's strategic plan for their Boise, Idaho beauty supply manufacturing company, Meliorra. But when a Japanese company approached Meliorra in mid-2004 about introducing its anti-wrinkle skin-care product, Avotone, in the Asian market, Guill, 29, seized the opportunity. In exchange for an exclusive deal on the product line, the Japanese company did all the work of launching and spreading the word about the product in Asia. Though the deal has delayed launches in the United States, "all the things we're doing for them help us take our product to the next level here," Guill says. Assuming projections hold up, Meliorra expects 30 percent of its 2005 sales--projected to be more than $4.5 million--to come from Asia.
Guill admits that he wouldn't have known there was a market for the product in Japan had he not been approached. That reactive position isn't unusual for small-business owners, who tend to initiate exporting only in response to customer demand. A November 2004 study commissioned by the SBA's Office of Advocacy to look at the costs of and barriers to developing foreign markets for small businesses found that business owners see the pursuit of those markets as a drain on stateside operations and on their own time and energy. Add to that the risk of nonpayment from an overseas buyer and the fact that export financing can be difficult to come by, and it's no wonder most small companies tend to avoid it.
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