According to the United States Small Business Administration, small businesses comprise 97.7 percent of U.S. firms that export products and services to other countries.
In fact, they account for 33.6 percent ($471 billion out of $930 billion) of known export value.
As the internet and social media continue to bolster our ability to collaborate with others across the globe, it’s not a stretch to predict more small businesses will embrace the opportunities to reach customers beyond the U.S.
Small businesses have opportunities to grow and thrive in a large, diverse global market. According to the International Trade Administration, 70 percent of world’s purchasing power comes from outside of the U.S.
Doing business internationally offers advantages operationally and competitively via the potential to increase revenue and gain some protection from fluctuations in domestic markets.
That doesn’t mean doing business globally is easy, though. Entering markets in other nations requires attention to details you may not have had to concern yourself with before.
In addition to its many opportunities, doing business overseas poses some risks and obstacles.
• Issues in getting paid
• Protection of Intellectual Property Rights (IPR)
• Corporate income tax in certain countries (Some charge extra taxes upon receiving goods.)
• Lofty shipping costs and unreliable postal services in other countries
• Trust issues with the partners or agents you’re working with
• Cultural expectations when conducting business
• Rules, restrictions, and license requirements of destination countries when shipping products
• Language barriers (e.g., in marketing materials, avoiding words and terms that may be unfamiliar or inappropriate for other cultures)
According to SCORE mentor Jin Han who has over 20 years of global consulting experience, “If you’re interested in going global, be sure to understand the local culture, and be sure to account for extra costs, be it in the form of tax, tariff, delivery costs and other costs.”
For additional insight about doing business globally, you can tap these resources that specialize in providing information and programs in support of international trade:
• SBA’s Office of International Trade: This office works with other federal agencies and public and private groups to encourage export opportunities for small businesses.
• U.S. State Department’s Direct Line to American Business program: This program gives small businesses direct access to U.S. Ambassadors, mission teams, and foreign government officials to explore market opportunities in their respective countries. The State Department also provides the Business Information Database System (BIDS), a portal to help U.S. businesses learn about international projects that may offer commercial opportunities.
• U.S. Commercial Service’s Gold Key Matching Service: This service can help small businesses find potential overseas business partners, agents, distributors, and sales representatives.
• Export.gov’s links to information about doing business in specific countries: These links offer insight and data about various countries’ cultures, business climates, market research, service providers, trade events, and other information. The breadth of information available varies from country to country.
“Doing business globally can be immensely rewarding, both financially and culturally,” shares Han. “However, there is also an added learning curve in order to reap the benefits, so be sure to perform due diligence, and seek advice where possible.”
Call the local branch at 269-925-6100 or visit www.swmi.score.org to request SCORE help with your business.