In Florida, 60,000 Florida companies are exporting $55 billion in goods and services overseas. Small businesses account for 66 percent of all those exports. The exporting process may seem daunting but if you have a product or service with a proven track record in the domestic market, you may be already planning on international expansion.
Once you have determined exporting is right for you, you can tap a number of resources to help you research markets, defray your costs of doing business overseas and get your invoice insured.
So where do you start as an exporter?
“Exporting takes more time, it takes more money, and we want to mitigate your risks and increase your potential for success. We want to narrow down your markets to one or two initially and you want to look at qualitative and quantitative data,” said Debbie Lanford, international trade specialist at Florida SBDC at FAU, who gave a presentation at the Small Business Leadership Conference in Orlando in June. “In our network [Florida SBDC], we are fortunate to have so many international trade resources. That’s what sets our program apart.”
IT STARTS WITH RESEARCH
To begin your own research, look at trade flows – you want to see where your product or service is in most demand. “Made in the U.S.A. means something very special to a lot of countries. We also look at U.S. origin trade data to analyze the trends,” Lanford said.
As we explored in another Growbiz report, SBDC clients have access to IBISWorld, which uses economic, demographic and government data to help identify business operating risks and opportunities across 1,300+ industries. Each industry report includes detailed performance data and analysis on the market, supply chain information, forecasts, analysis of external drivers, major player market strategies, and industry profit and costs benchmarks.
Euromonitor is another great resource available to SBDC clients. These include reports on the industry, country and consumer behavior. “Through this you are starting to get a comprehensive picture of who’s buying the product, how they are using it, what the trends are, what the competition looks like, and the purchasing behavior of those countries,” Lanford said.
Metrics are key, she said. ”If you can’t measure it, it’s not worth pursuing. We want to have objective evidence that it is a good market.”
For sales leads, SBDC can filter a list from Dunn & Bradstreet databases, which includes contact information. Shelly Bernal, an international trade specialist for Florida SBDC at FIU, also recommends ReferenceUSA, which SBDC also makes available to clients.
GOOGLE IS YOUR FRIEND
Julia Montgomery, international trade specialist at SBDC at University of North Florida, outlined a number of free ways to access research. (GrowBiz also explored how to mine free government databases for valuable insights – find it here)
She recommends Google’s Market Finder tool. Using key words related to your product or service, you can pull the number of monthly searches per country for people looking for those key words. It also gives you the ad words recommended bid price. “It’s a fabulous indicator of demand and a great indicator of potential competition,” Montgomery said.
Once you have narrowed down your target markets, translate your keywords into the language of the market for further searches on Google and on country-specific e-commerce sites, such as Amazon.com/uk for instance, and Alibaba. Pro tip: Use the images category for a Google search. You can quickly see a lot of information about where this product is being sold.
THE EXPORT MARKETING PLAN
Now it’s time to develop an exporting strategy. Florida SBDC Network partners with Enterprise Florida and the Department of Commerce to bring small business owners Export Marketing Plans.
“We use the expertise of our international trade consultants (including experts at Florida SBDC at FIU) to research international market opportunities, identify those international market opportunities and develop a strategic plan on how to enter the highest probability markets,” said Michael Myhre, CEO of Florida SBDC Network, at the small business conference produced by the Jim Morin Institute and Florida SBDC. “It is a fantastic service. The small business only pays $500 for it and the rest of the cost (about $4,500) is picked up by Enterprise Florida and Florida SBDC. If I told you that if you could grow your revenues by 20 percent, would you invest $500? Check it out.”
If your business meets the qualifications, you will meet with a trade specialist to conduct a confidential, in-depth business assessment, Montgomery explained. The consultant will spend about 60 days and prepare and provide your company with a comprehensive, customized Export Marketing Plan. For more information, call 866-737-7232 or apply online here.
Every Export Marketing Plan includes an action plan. Montgomery said. “Once we provide it to our clients, we work with them to help them deploy those suggestions.” (Read about how one South Florida company used an Export Marketing Plan to expand)
MORE GRANTS AVAILABLE
Here are some grants available for Florida exporters, underwritten by Enterprise Florida:
Target Sector Trade Show Grant: For qualifying companies, this grant will reimburse a percentage of booth costs (from 75% to 100% of costs for up to $10,000) for overseas trade shows.
Gold Key Reimbursement Grant:This grant subsidizes the small business’s cost of meeting with pre-screened and pre-qualified buyers, agents, importers and representatives during Enterprise Florida trade missions.
Website Localization Grant: An $8,000 grant to assist in customizing your website for target foreign markets.
International Registration Grant: This one helps small businesses offset the costs of obtaining international product registrations, certifications or markings that may be required to do business overseas.
EXPORT CREDIT INSURANCE
Once you are exporting, take advantage of EXIM Bank, a government resource for small business exporters. “Ninety percent of what we do is helping U.S. small businesses in every state export US-made products and services. No deal is too small,” said Jennifer Simpson, regional director of EXIM Bank who is based in Miami.
“We offer insurance to protect your invoice in case that customer does not pay you. What the U.S. government does is it does an anonymous credit check and that initiates a certificate for one year that says if the overseas customer doesn’t pay you, you can take that certificate and cash it in with us. Typically it is 95% percent protection of your invoiced product,” Simpson added.
Reasons for non-payment can be commercial or politically related, such as currency transfer risk. Insolvency is a reason in only 30 percent of the claims, she said. “I didn’t think it would be that customer – that’s what we always hear.”
How much does the insurance cost? Here’s an example. For a $20,000 transaction in Mexico it would cost you $130 to $160 for the insurance, Simpson said. And the application process is quick, she said. “It is the shortest government application I have ever seen – 2 or 3 pages.”