6 Tips for Small Businesses to Enter the Lucrative International Market
For decades, U.S. small business owners believed that international business expansion was out of their reach. They left the global market place to the Exxon Mobil’s, GE’s, and Coca Cola’s of the world. Times have changed. In fact, conditions have never been better for American small businesses to consider expanding their business beyond the U.S. borders. The International Trade Agency estimates that 70% of all world purchases are made outside the United States and many U.S. small businesses have begun experiencing the benefits of doing business internationally. However, as with any business strategy, small businesses entering the international market must prepare themselves with the proper information and tools. What follows are six tips to help small companies expand their business to the fast-growing international market place.
1. Utilize the Internet and Social Media
American companies are now able to meet virtually with clients, potential clients and partners around the world using internet tools such as Go To Meeting and Skype. Companies make international calls free of charge using technology such as WhatsApp. Over the internet, potential foreign consumers can purchase American products online without the need of the company ever setting foot on foreign soil. American small business owners and staff can join Industry specific international business groups on Social media sites such as Linked In, and take advantage of usually low budget marketing platforms such as Facebook and Instagram for promotion. International communication has greatly improved allowing companies to develop local business relationships and stay current on international business progress, issues and trends.
2. Incorporate Business Matchmaking
In a recent small business symposium sponsored by Impacto Latino, there was a recurring theme regarding strategies for small business growth: partnerships. Teaming with a local partner can drastically reduce the time, the cost, and the risk of entering international markets. Integral to this, however, is selecting a partner who is trustworthy and competent. U.S. government agencies (see below), and social media networking sites are a good resource to help identify quality business partners.
3. Consider an International Business Consultant
Another way to find the right international partner is by using an international business consultant with proven experience and track record. Trained and experienced international consultants can provide important support and insight for small businesses looking to branch out abroad. The consultant should be well versed not only in the local business environment, but also with the government, the political, and the regulatory scene as well. It is also important that the consultant have a keen understanding of the U.S. business culture.
4. Focus on products, services, and solutions that are Unique to a Region
Many unique products, technologies and solutions originate in the U.S. Often when these products and solutions are no longer considered unique in America, they are still very new to international markets.We have used this strategy on several occasions while expanding American business overseas. For example, our clients were the first to introduce vehicle parking app technology, electronic mapping technology, and rapid oral diagnostic technology to certain international regions. Online resources and quality consultants won’t require much effort to verify which products, services and solutions are unique to or have limited competition in a specific international market.
5. Be familiar with these five US federal government agencies
Most businesses are unaware of these helpful government partners. These agencies provide both resources and knowledge to American small businesses looking to expand internationally.
OPIC - The Overseas Private Investment Corporation (OPIC) is a self-sustaining agency of the U.S. Government that helps American businesses invest in development in emerging markets. OPIC provides:
Direct Loans to Small Businesses
Political Risk Insurance
Private Equity Funds
EXIM Bank - The Export-Import Bank of the United States (EXIM) is the official export credit agency of the United States. EXIM is an independent, self-sustaining Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services. EXIM Bank provides:
Trade Credit Insurance
Long-term & Medium-term Guarantees
US Commercial Service - The U.S. Commercial Service is the trade promotion arm of the U.S. Department of Commerce's International Trade Administration. U.S. Commercial Service trade professionals are in over one hundred U.S. cities and in more than seventy-five countries. USCS provides:
International Company Profile
International Partner Search
US Trade Development Agency - USTDA’s program helps to position U.S. firms in the early stages of project development and to compete for lucrative contracts during the implementation phase. USTDA provides:
Prefeasibility and Feasibility Studies
Conferences designed to focus on US goods and services
Reverse Trade Missions
Small Business Administration Office of International Trade - The Office of International Trade is SBA's office for the support of small business international trade development. Within this office the State Trade and Export Promotion Grant Program (STEP) is a 3-year pilot trade and export initiative to make matching-fund grants for states to assist “eligible small business concerns,” enter and succeed in the international marketplace.
6. The Foreign Corrupt Practices Act
Last but certainly not least, American companies doing business abroad are expected to adhere to the rules of the FCPA and these rules are to be taken very seriously. The Foreign Corrupt Practices Act of 1977, and the amendments of 1998 ("FCPA") was enacted to make unlawful the making of payments to foreign government officials to assist in obtaining or retaining business. As a part of the international negotiations process, we advise our clients to include a FCPA clause to all international agreements with their clients, partners, affiliates, and representatives. There are several law firms available with FCPA expertise to help businesses prevent unknowingly breaking the law and to defend these businesses if laws are broken.
In conclusion, expanding American small business internationally is both desirable and doable. It can be an economic boost to most businesses' bottom lines. Being in the global market can not only generate additional revenue but also can allow for shifting resources from a slumping region to an area that is more economically robust. By utilizing available federal government resources, new technologies, and quality partners and consultants, small businesses can begin to explore international markets with minimal investment and risk.
Jerry Pierce, Jr. is the CEO of The Interamerica Group, with offices in Washington, D.C. and Sao Paulo, Brazil. For more information on this topic, please contact email@example.com
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