The U.S. market for almost everything is huge, but it’s notlarge enough for many entrepreneurs. For these growth-mindedbusiness owners, the rest of the world is their oyster. Seekinginternational growth offers opportunity aplenty by going global asan importer-exporter. Some of the specific advantages presented bysuccessfully growing globally include:
- You can extend the sales life of existing products and servicesby finding new markets to sell them in.
- You can reduce your dependence on the markets you havedeveloped in the United States.
- If your business is plagued by destabilizing fluctuations inyour markets due to seasonal changes or demand cycles, you can evenout your sales by tapping markets with different or evencountercyclical fluctuations.
- You can exploit corporate technology and know-how.
- Finally, by entering the global marketplace, you’ll learn howto compete against foreign companies-and even take the battle tothem on their own ground.
The overriding reason to go global, of course, is to improveyour potential for expansion and growth. The obvious opportunitiesare the markets in Canada, Mexico, Europe and Japan. But those onlyscratch the surface. There are many other fast-growing, lesscompetitive markets.
Along with promise, going global carries an equally heavy loadof peril. From chasing too many opportunities to getting whacked bycurrency fluctuations, the game of international expansion has manythreats that domestic-only businesspeople never see. You can grabthe brass ring of growth by going global, but only if you avoid thepitfalls.
Many have blundered, but that doesn’t mean you have to. Beloware some of the most common exporting mistakes:
- Failing to plan your strategy.
- Chasing inquiries the world over. Just because dozens ofcountries show interest doesn’t mean you’re ready to market yourproduct everywhere. Patience is key.
- Assuming if it works in America, it’ll work anywhere. Butthat’s not true–you need to tailor your sales and marketingefforts to each country. Don’t ignore the cultural differences thatshape the marketplace. The same goes for pricing, shipping, paymentterms and packaging.
- Assuming business will be done in English. Familiarize yourselfwith the local language.
Today almost all entrepreneurial strategies for internationalexpansion should take currency fluctuations into account. Often,the number of dollars it takes to equal a unit of a particularforeign currency can make the difference between a deal worth doingand a deal that would be a disaster.
When the dollar is weak against a foreign currency–it takesmore dollars than usual to buy a unit of the foreign currency–itstrengthens exporting entrepreneurs in a few ways. If theentrepreneur keeps prices level, those prices look lower to a buyerdealing in, say, Japanese yen or Mexican pesos.
The simplest way for exporters to deal with currency risk is toinsist that all deals with foreign partners be done in dollars.However, that can drive away potential customers who prefer to dobusiness in their local currency.
Few nations have experienced governmental and economic systemsas stable and long-lasting as those in the United States. As aresult, many U.S. companies that venture overseas are completelyunprepared for overseas instability. If an economic crisis impactsyour business, take the following steps:
- Assess your financial capability.
- Obtain information. A good local partner also comes in handy.You’ll need somebody on the ground who can tell you what the statusis there.
- Save your client base.
- Acquire legal representation by hiring local lawyers.
- Remain focused on your goals.
As an international entrepreneur, you face risks every day youdo business. The cargo you’re exporting could fall off the ship, orit might get stolen in transit. Or maybe a customer went out ofbusiness and didn’t pay for the last shipment you delivered. Evenacts of nature can throw a wrench into an otherwise smoothlyfunctioning global business. So if you haven’t already, it’s timeto consider whether or not you’re prepared for what the futuremight bring.
Insurance offers protection, peace of mind and much more. Thetypes of coverage available to exporters are numerous and includecargo insurance (to protect your goods in transit), creditinsurance (to protect against nonpayment), fire and theftinsurance, and foreign investment and trade risk insurance (forconfiscation or expropriation of your property overseas).
Policies can be purchased separately or in a package dealoffered by many insurers. To determine the kind of protectionyou’ll need, consider each country and situation individually, andresearch the risks involved. You may even want to talk to aprofessional consultant.
Of course, certain situations allow for a degree of chance. Ifyou have a relationship with a customer in a politically stablecountry, such as the United Kingdom, you might choose to forgocredit insurance. But it probably wouldn’t be a good idea if you’reshipping to Africa, which insurers consider to be the riskiest partof the world.
The cost of insurance depends on many factors, such as where youare shipping cargo, who your customer is, how valuable the goodsare, and the means by which you ship. And policies, which expireanywhere from after one transaction to after one year, should becontinually reviewed.
