Where Small and Midsized Companies Can Find Export Help; a Number of Government Agencies Have Programs to Assist in All Phases of Exporting
If the myth that the export market was largely the province of giant multinational corporations and high-tech companies was ever true, it has long since been disproven. Most U.S. companies, whatever their size, can export profitably. According to the Small Business Administration, 25% of the companies that exported in 1988 had fewer than 100 employees, some had less than $100,000 in annual sales and high-tech companies were in the minority. But exporting has worked out well for these small businesses. A Dun and Bradstreet survey of small exporters found 41% reported export sales growth exceeded domestic sales growth and 23% had increased export sales by 20% to 49% in the past year. However, for a small company with a limited staff, success in global markets depends heavily on obtaining the right advice and support. CPAs, traditionally the chief financial adviser5s for small and midsized companies, are in a position to recognize where help is most needed and recommend appropriate action. To help CPAs assist clients interested in exporting, this article summarizes many of the export programs available for small businesses. SELECTING THE RIGHT MARKETING APPROACH Small and midsized businesses new to exporting generally find it easier and more cost-effective to market through an intermediary, at least at the outset. When they are more familiar with the foreign market, they can consider a direct export sales effort through an international department or a joint venture arrangement. * Marketing help in the United States. Several types of export service companies offer different levels of assistance and fees in marketing a product or service abroad. The correct choice for a specific exporter depends on the company's overseas marketing plan and the services required to implement it. Brokers and agents set up specific deals with international buyers. Usually, these brokers have small staffs with industry contacts in one or more countries. Some provide consulting services on documentation, labeling and packaging, but much is left to the customer. Export management companies (EMCs) are similar to brokers but have larger staffs to arrange the details of financing and shipping, which can became extremely complex. They usually specialize in a particular product group or country. Export trading companies (ETCs) actually take title to the goods and pay the exporter directly, unlike brokers or EMCs. These are usually large companies that handle a variety of products with the backing of a bank or port authority. They sometimes handle competitive products. EMCs and ETCs are listed by area and cross-referenced by product specialty in a Department of Commerce publication, Partners in Export Trade, available at $11 per copy from the Government Printing Office, Superintendent of Documents, Washington, D.C. 20402; phone: (202) 783-3238. Refer to GPO: 003-009-00523-0. * Marketing help overseas. Two broad types of overseas marketing representatives are available to an exporter. A foreign agent is similar to a manufacturer's representative in this country. The agent becomes the exporter's sales representative in a given area, working on commission. Even though it is reasonable to assume a foreign representative would be a more effective selling agent in an overseas market than would a U.S.-based company, an exporter should realize that there are risks involved. Assembling a network of overseas agents is much more difficult than engaging a domestic company. Also, an exporter needs to be aware of local laws when employing an overseas agent. Should the agent not perform up to standard, some countries' laws will still protect the agent over the U.S. company's interests. A foreign distributor can either buy the goods from the exporter outright or sell them on commission. Either way, the distributor stocks them in inventory, shares in the marketing, handles the servicing and extends credit to the customers. …