Six Ways to Ease Exporting Simple steps to help steer your shipments through bureaucratic red tape and complex tax laws

By Diana Ransom

Among all of the president's plans to boost jobs, some economists say his goal to double exports in five years could do the trick. To steer your shipments through bureaucratic red tape and complex tax laws, make sure to follow these six tips:

  1. Commit a manager to the project
    Exporting isn't a once-and-done event, so you'll want to make a commitment to it. Consider dedicating a top-level manager to the project who can help form your company's export strategy, suggests Fred P. Hochberg, the chairman and president of Ex-Im Bank, the official export credit agency of the U.S. You might also spend some time analyzing your company's possible competitive advantages abroad, as well as whether your company has the financial resources to support exporting. To export products successfully, you may need to hire added staff members, as well as devote working capital to boost production.
  2. Examine market opportunities
    "You will have a far greater impact by focusing on two to three potential markets or regions where your business is needed than by trying to cast a net over an entire country," says Victor Notaro, a group manager of Global Treasury Management for The PNC Financial Services Group in Pittsburgh. And although countries with growing economies likes India and China may look like ideal targets, "oftentimes the most prudent first country for a small business to consider exporting to is Canada, thanks in part to the extensive bilateral trade between Canada and the U.S., and to the cultural and legal similarities," he says.

    <insert ad here>
  3. Consider product adaptations
    Then consider adapting your company's products and services for different markets. For instance, products that are big sellers in the U.S. may not be as popular in other countries. Also, the price may be too steep. "For us, we had to consider that while the iPhone is a big deal in the U.S., if I try to find an iPhone case in India, I won't get very far. Plus, Indians will not pay more than $8 for a case," says Shashi Reddy, the founder of Case-Mate, a cellphone accessories company in Atlanta.
  4. Pick a form of distribution
    Companies can ship products internationally from the U.S. via freight forwarders and fulfillment companies such as eFulfillment Service and Shipwire. The latter ships to Canada and the U.K., where it has warehouses that will transport goods internationally to any country covered by FedEx, UPS or the local parcel carrier. Businesses might also consider using export management software such as Integration Point and TridentGLOBAL to help manage tariff schedules and foreign regulations.

    For the most control over shipment needs, companies could opt for a joint venture with a foreign company or establish a presence within the countries to which they export. Scott Layman, a co-owner of Zyvax, a specialty chemicals supplier in Ellijay, Ga., which exports to about 100 countries, subscribes to the latter strategy. "Having my own people there to handle interactions with customs, rotating inventory, and establishing bank accounts in the local currency made transactions effortless," he says.
  5. Keep taxes in mind
    However, keep in mind tax consequences, advises Jeffrey Olin, an expert in international tax for management consultancy Grant Thornton. Typically, representative offices establish preparatory services such as market research and coordinating between companies. However, if the office engages in any direct profit-making activities, "You may have an income tax liability, even if the product derives from the U.S.," Olin says. Plus, countries like China may levy a value-added tax, which is an indirect consumption tax on products and services. (For help wading through international tax laws and regulations, check out the U.S. Commercial Service and the District Export Council , as well as bankers and international law firms.)
  6. Secure financing
    Typically, commercial banks shy away from lending against foreign receivables, says Victor Sandy, the executive vice president of Global Commercial Credit, a business-credit insurance broker in Bingham Farms, Mich. That can be a problem for small firms in need working capital to fulfill orders and sustain themselves until payments come in. However, you can address a bank's concerns and protect your company's foreign receivables from buyer default with insurance. To do so, Sandy suggests working with a bank that has a partnership with the Export-Import Bank of the United States. Currently, the Ex-Im Bank, which has partnerships with about 50 lenders, will generally provide insurance coverage of up to 95 percent of an invoice, at a cost of roughly 55 cents per $100 of shipment for 60-day repayment terms.

Small firms might also check out the Small Business Administration's Export Working Capital Program, which offers a line of credit or a loan of up to $2 million, as well as 90 percent guaranteed loans worth up to $1.5 million. For small firms that qualify for this program, insurance through the Ex-Im Bank can be had for a 25 percent premium discount.

More stories from smSmall Biz:

Wavy Line
Diana Ransom is the former deputy editor of Entrepreneur.com.

Editor's Pick

She's Been Coding Since Age 7 and Presented Her Life-Saving App to Tim Cook Last Year. Now 17, She's on Track to Solve Even Bigger Problems.
Lock
I Helped Grow 4 Unicorns Over 10 Years That Generated $18 Billion in Online Revenues. Here's What I've Learned.
Lock
Want to Break Bad Habits and Supercharge Your Business? Use This Technique.
Lock
Don't Have Any Clients But Need Customer Testimonials? Follow These 3 Tricks To Boost Your Rep.
Why Are Some Wines More Expensive Than Others? A Top Winemaker Gives a Full-Bodied Explanation.

Related Topics

Business News

California Woman Arrested For $60 Million Postal Service Scam

Lijuan "Angela" Chen faces two charges that each carry a maximum sentence of five years in prison.

Growing a Business

Trendspotting 101 — How to Stay Ahead of the Curve in Your Industry

Learn how to spot and capitalize on emerging trends in your industry with these practical tips.

Business News

A Wegmans Employee Allegedly Stole Over $500,000 from the Company

Alicia Torres pleaded guilty to crimes carried out over nine years while working at Wegmans in Webster, New York.

Business News

Hundreds of People Mistakenly Told They Have Cancer in Biotech Software Mishap

The biotechnology company, Grail, said a software issue caused one of its vendors to accidentally send nearly 400 letters mistakenly telling patients they have cancer.

Growing a Business

How to Harness the Power of Data Analytics for Business Growth

To thrive in the competitive landscape, entrepreneurs must understand and leverage the power of data analytics.