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2011

Think your customers are only local to your small business? Well, think again.

 

Did you know that a 135-person technology company can sell its software in nine different countries without setting foot on a plane? Did you know that, by “informationalizing” its business, a small trucking company can do business in Europe without buying a single extra truck? Did you know that, despite the ubiquity of the term “made in China” throughout the world, “American made” has enormous cache in emerging markets, including China? If you’re a successful small business owner, you should.

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The time may be ripe for considering a global expansion for your business. Two-thirds of the world’s purchasing power is in foreign countries and demand is growing as the world economy continues to improve. Additionally, the U.S. has active free trade agreements with 17 countries, including Australia, Canada, Chile, Costa Rica, Dominican Republic, Guatemala, Israel, Jordan, Mexico, Peru and Singapore, and pending agreements with Columbia, Panama and South Korea.[i] And emerging economies, like China and India, represent an enormous untapped market as the dollar declines, incomes rise and demand for authentic niche goods blossoms. American small businesses that are overly reliant on domestic markets, or that struggle with seasonal downturns in demand may be particularly well advised to consider tapping overseas markets.

 

Small business owners seem to be getting the message. The number of small businesses exporting goods and services has tripled since 2001, reaching 250,000 companies and $500 billion in sales this year, according to the U.S. Small Business Administration. A report from Intuit and the California think tank Institute for the future predicts that, by 2018, half of American small businesses will be involved in international trade.[ii] And the Global Entrepreneurship and Development Index (GEDI) from the U.S. Office of Advocacy ranks the United States as a world leader in startup skills and competition, and first in new technology development.

 

Ambassador Ron Kirk of the Office of the United States Trade Representative predicted: “Exports from smaller businesses have experienced incredible growth over the last decade. With the right help, they can continue to expand for the next ten.”[iii]

 

If you’re ready to expand your small business overseas, the following tips will help you get there successfully:

 

  • Maximize the functionality of advanced e-commerce technologies, such as social networking, merchant payment services, buyer/seller matching technology, currency translators and language sub-domains.
  • Invest in website translations for each of the foreign markets with which you do business. In order to avoid confusing American jargon and country-specific idioms, translate text into the new language and then back into English again.
  • Micro-specialize your business to fit a very specific niche that isn’t being filled overseas.
  • Focus on locations that already have an advanced digital infrastructure, so you can hit the ground running.
  • Familiarize yourself with new government programs such as the National Export Initiative, the Export Working Capital Program, and the Small Business Jobs Act.
  • Remember that technology is no replacement for human relationships. Forge good ones with local distributors, agents and promoters.
  • Hire the best possible support from business consultants, tax lawyers and bankers with international expertise and on-the-ground contacts.
  • Educate yourself on the latest financing, insurance and grant programs, as they can help you capitalize your overseas transactions, keep your exports flowing seamlessly and remove as much risk as possible from the equation.

 

If your new small business venture or current business expansion requires financing, there are a number of public and private financial vehicles available:Ron Kirk Small Business Export.png

 

Traditional Bank Loans are basic term loans for financing an expansion into overseas markets. They range from intermediate-term loans that must be repaid in less than three years to long-term loans, which allow from three to 20 years for repayment.

 

SBA Express Loans are the fastest and easiest government loans to procure and are geared toward companies with less than $25 million in revenue. Banks use their own forms and procedures, and the SBA provides an answer in less than 36 hours. Loan proceeds, which take the form of a term loan or revolving line of credit, can be used to finance export orders, expansions, equipment purchases and real estate acquisitions.

 

International Trade Loans are designed to put small businesses in a better competitive position, so the funds must be used for long-term fixed assets, including construction and renovation of physical structures; modernization of manufacturing facilities; and expansion of existing operations.

 

It’s clear that the need for small businesses to consider overseas expansion has never been greater. There is a presidential mandate (the National Export Initiative) to double U.S. exports over the next five years. “America’s small business exports…still represent only about 30 percent of our export revenues, and more than half of small-business exporters only ship to one country,” said Administrator Karen Mills of the Small Business Administration.[iv]

 

So, as you consider the future viability of your company, remember the words of former U.S. Commerce Secretary Carlos Gutierrez: “We simply cannot afford to be stagnant: standing still in the global economy is essentially walking backwards…. Entrepreneurs…across the country can win in world markets if given the chance to compete.”[v]

 


[i] (Opening Shop on the Global Main Street (February 2009). Business Credit (National Association of Credit Management), Vol. 111, Issue 2, p. 66.

[iii] (Global Access for Small Business Initiative, Export-Import Bank, January 2011)

[iv] (Global Access for Small Business Initiative, Export-Import Bank, January 2011)

[v] (Import Export Bank) (2008 SBA International Trade Symposium Remarks)

by Christopher Freeburn.

 

As fuel prices shot through the roof over the last several years, airfares quickly followed, adding more woes to beleaguered frequent fliers, already harried by invasive and time consuming security checks. Worse still, as flight delays multiply, many airlines have all but eliminated traditionally free perks like meals, pillows, and drinks, and are now increasing charges for carry-on luggage and numerous other amenities.

 

Busines-Travel-Pull-Quote2.pngFacing this maelstrom of rising costs and increasing inconvenience, businesses of all sizes are beginning to question whether or not specific business trips are necessary, or whether technology can bridge the gap instead of actual travel. As always, small businesses face even greater challenges from increasing travel expenses, since their budgets leave much less room to absorb higher costs.

 

Fortunately for small businesses, telecommunications technology and the Internet make it possible to reach out to distant places like never before. There is now a wide range of communication options available, which if not quite the equivalent of physically being there, at least provide more robust long-distance communication than has ever been achievable before. These technologies don’t completely end the need for business travel, but in a time of escalating travel prices, they provide a low-cost alternative that can allow you to accomplish much of what you could have done had you traveled yourself.

 

“There will always be situations that demand real physical contact,” says New Jersey-based communications consultant Kevin Freeman. “And in many parts of the world being able to look your counterpart in the eye and share a real handshake is still needed to seal a deal, but for a lot of the other reasons we travel—meeting mid-level staff, giving in-company presentations, having detailed discussions of budgets and marketing plans—there is technology already available that can connect businesspeople without running up frequent flier miles.”

 

Technological interfaces

Early attempts at videoconferencing left a bitter taste in many participants’ mouths due to scratchy or out-of-sync audio and poor video quality or connections that failed in mid-conversation. ButBusiness-Travel-in-article.png these issues have largely been resolved due to the advent of high-speed fiber optic cables.

 

Today’s high-end videoconference systems use high-fidelity audio and high-definition video, displayed on large video screens, to provide a vibrant and convincing simulation of a real face-to-face meeting. Videoconferencing facilities are available for rental by most major telephone, satellite, and cable companies in many cities, capable of communicating with your counterparts in similar venues hundreds or thousands of miles away.

 

If renting such a facility isn’t something you plan to do on a frequent basis, a number of commercial business products exist that can provide your small business with similar capabilities, provided that you also have a high-speed Internet connection. Cisco’s Webex is one such provider, offering both online meeting and videoconferencing capabilities. (Click here for a demo of WebEx, which offers new customers a complimentary 14-day trial.)

 

Web conferencing takes the traditional videoconference and sends it zipping across the Internet. Typically, in a web conference individual participants sit at their own computers, which are connected via the Internet (as opposed to videoconferencing in which participants on both ends usually sit in groups around a single set of screens). But increasingly, web conferencing lets participants join in via their mobile devices. There is a variety of web conferencing software available, some of which requires installation on each participating computer, whereas other programs simply require participants to direct their browsers to a particular website to access the web conference.

 

Most web conferencing applications, like Microsoft Office’s Live Meeting, require the use of an external server to host the conference—a Microsoft-owned server, in Live Meeting’s case. (Click here for a free demo of Live Meeting.) A benefit of web conferencing over videoconferencing is the ability to share applications and data among individual participants, with access and control of the application or data shifting back and forth among the participants as the conference progresses.

 

Environmental consciousness

Reducing budget strain from high fuel and airfare costs isn’t the only reason some companies are beginning to reconsider extensive business travel. “There is a growing recognition even in the business community of the impact that fossil fuel-burning modes of transportation like cars and airplanes have on the environment we all share,” says Freeman. “This is a particular concern amongst Europeans, but it is becoming very common in the U.S., too.” (To calculate your share of carbon emissions produced by taking a business trip, check out this Carbon Footprint Calculator.)

 

The more we travel via automobiles and airplanes, the more carbon dioxide we produce as a result, which contributes to global warming and the greenhouse effect. “There is a growing school of environmentally conscious thinking that says we should trim back wide-ranging travel in order to prevent damaging the environment,” Freeman adds.

 

In the end, whether you are motivated by concern for the environment or concern for your bottom line, video or web conferencing is a capability you should consider adding to your business toolkit.

As Small Business Week kicks off, we thought it would be a good time to extol the value of collaboration between large and small businesses. For instance, if small businesses are able to make inroads as suppliers to blue chip corporations, the benefits will go both ways. This is true whether you are a traditional small business or one of the many diverse small businesses that represent a Small-business-supplier-Pull-Quote.pngsignificant stratum of future business in the United States. Small businesses have already shown that they can more than double their revenues and add a significant number of jobs after winning just one contract with a large company. For Fortune 500 companies, facilitating the growth of small and minority-owned businesses will help ensure worldwide economic prosperity for all in the next decade.

 

“The Ten Ps”

Once you set your mind on moving into the large business space, it would be wise to make sure you have what we are calling “The Ten Ps”:

 

  1. Patience. A realistic timeline for becoming a supplier to a Fortune 500 company is several years. It takes time to build familiarity and trust.
  2. Partners.  Partnering with a midsize company already on your target company’s preferred provider list is a great way to test the waters.   If the partner has a significant international presence, you might want to formalize the relationship to help each other meet the overseas needs of prospective client companies.
  3. Preparedness. Research companies you may want to target. Analyze their purchasing history and figure out where your product or service might be needed.
  4. Positioning. Differentiate yourself from your competition.   Be able to easily and quickly deliver key messages – verbally and in your collateral material – that set you apart from other small businesses vying for the same contracts.
  5. People skills. Spend time developing relationships with key contacts within large companies. Attend industry events, respond to corporate blog postings, and network regularly.
  6. Project-Based Business.  Remember that getting your foot in the door with a small project might lead to a long-term contract.
  7. Promotion. Find ways to get the word out about your sustainability efforts, if appropriate. Leverage sustainable business programs and market yourself as a “green” leader in your industry. Look at opportunities to partner and collaborate with large corporations on synergistic environmental concerns.  
  8. Packaging.  Consider “bundling” your contract with another complementary small business and present yourself as a more cost- and time-effective package. White-in-article.png
  9. Pitch. Find the right people to whom you should pitch your product or service and show them how your company can help them do their jobs better.
  10. Procurement of a certification.  It’s important to understand that many Fortune 500 companies have “supplier diversity” programs that specify the use of small and minority-owned businesses for a certain percentage of their contracts. Certifications are available to businesses owned by ethnic minorities; women; Lesbian, Gay, Bisexual, Transgender (LGBT) individuals; veterans; and persons with disabilities. While the process can be time-consuming, there is help available from the National Minority Supplier Development Council (NMSDC); the Women’s Business Enterprise National Council (WBENC); and the Small Business Administration (SBA), all of which offer certification.

 

Whether you’re a small software developer; a graphic design firm; a food service provider; or a telecommunications company, there are major opportunities for you in the Fortune 500 market.   As Edward Roberts of MIT’s Sloan School of Management said 19 years ago in Inc. magazine: Large corporations and small suppliers have a “shared destiny.”[i]   The time for that destiny to be realized is now.

 

As you consider your future, take a look at what big brands are doing at Small Business Week to facilitate small business growth and long-term viability.

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