Global business becoming key entrepreneurial strategy
Traditionally, international trade has been the bastion of larger businesses. But with many smaller to medium-size firms searching for new markets, more of them are looking outside the U.S. to generate more business.
Many domestic markets have become stagnant. Growth opportunities beyond the domestic borders are becoming more attractive for companies of all sizes.
More than 95 percent of the world’s population and two-thirds of global purchasing power are outside the U.S., yet less than 1 percent of the nation’s 30 million businesses export. Small and medium-sized companies are 97 percent of U.S. exporters, but they only account for about 30 percent of all exports.
Many U.S. companies stumble into their international first ventures. It is common for people from other countries to contact a firm about its products that were found online or during a visit to America.
However, more companies are making international trade part of their strategic plans. Technology is one of the major drivers of the expansion of trade.
Aside from the Internet, which has made buying and selling products anywhere possible, technology also has created dramatic improvements in transportation, banking and other forms of communication. These services are no longer just available to larger organizations.
These improvements have made doing business outside the U.S. easier, but there are still obstacles along the way. Entrepreneurs need to be aware of differences in laws, culture and economic systems, to name a few.
Tariffs and quotas top the list of laws to research for most companies.
“Exporting is not rocket science; it’s not harder than doing what they (small businesses) already do,” said Tim Sword, an export-assistance manager for the Ohio Development Services Agency. “But it does require a little more attention to detail, which requires someone to focus on it.”
One of the biggest hurdles for U.S. exporters is finding good partners in the country in which they want to do business. Most smaller companies enter international markets by exporting through distributors in the host country.
The entrepreneur must be able to vet those foreign partners. Obtaining information about a potential partner can be difficult.
Entrepreneurs interested in entering foreign markets have help available from federal and state governments. The U.S. Department of Commerce provides free services to anyone who is interested in exploring non-U.S. markets.
In 2010, the Obama administration launched the National Export Initiative that was aimed at doubling the level of exports from 2008 to 2015. The top priority of this initiative is to increase the level of exports by small to medium-size businesses.
Similar services are offered by the state of Ohio.
One company involved in exporting is Tiffin’s Ballreich Potato Chips.
Haley Thomas, director of sales and marketing, said: “We started shipping internationally in 2007 as a result of exploration into government-funded training programs and buyer missions. Through a local buyer’s mission, we exported our first shipment to Costa Rica. It was a tremendous learning experience for our small, regional company. Through continued efforts, we have since exported to many other countries, including China, Grenada, Mexico and South Korea.”
John Millar, dean emeritus at Tiffin University, agrees international business is becoming more important to every business.
“Almost every business is involved internationally, even if they are not actively trying to be,” he said. “Many of the goods and services inputs to your business have international origin and some of the direct suppliers may be located outside the U.S. or the NAFTA-affiliated countries.
“The first step in active involvement is to do a good, upfront analysis of where you want to sell and what it will cost you per unit of sales. Pick a market or, if you have a website, has a market picked you? Next, talk with your local chamber office or economic development office as they may already have compiled a lot of the information you will need for your analysis. Third, are there business operations in your community that you know who are active in international sales? They will have information and experience that most will be happy to share.”
Perry Haan is professor of marketing and entrepreneurship, and former dean of the business school, at Tiffin University. He can be reached at (419) 618-2867 or firstname.lastname@example.org.