Many U.S. based small businesses are only exporting to a single market, typically an international market where they have personal ties or where they are closely allied with local distributors. In fact, respondents to the National Small Business Association (NSBA) and Small Business Exporters Association (SBEA) 2016 Small Business Exporting Survey ranked Canada, Mexico and the UK as the top three countries to which they export. When asked to rank the top emerging markets for exporting, however, their responses included Northern Asia & Pacific Rim (China/Japan/Taiwan), South America and Western Europe. Sure, adding new foreign markets to your portfolio may put you out of your comfort zone, but it also provides a hedge against a downturn in one geographic area and drives multiple streams of revenue.
The decision to enter new overseas markets is not much different than deciding to build a new product or add a new domestic distribution channel—market research and analysis are the keys. If you’re exporting to one market, you already understand the process. What you may not know is that there are valuable resources that can help you improve your cash flow and mitigate your risk as you export to multiple markets.
Working Capital Guarantee
What small business couldn’t use some cash? Commercial banks, working in partnership with the Export-Import Bank of the United States (EXIM Bank), offer pre-export loans that can be used to:
- Purchase raw materials and labor and fund overhead costs incurred to fulfill an export sales order.
- Produce goods or services that are sold to U.S. companies and are subsequently exported— known as indirect exporting.
- Finance posting bid and performance bonds.
Export Credit Insurance
Coverage that enables you to:
- Safely extend credit to international buyers.
- Mitigate risk for your entire export portfolio or a particular buyer.
- Finance accounts receivables.
The U.S. Department of Commerce, the Small Business Administration, EXIM Bank and state economic development agencies are examples of organizations that help small businesses navigate the ins and outs of exporting to multiple markets every day.
You are Not Alone
Other small business executives have cracked the code on exporting to multiple markets. For some, exporting saved their businesses. Los Kitos Produce, a California-based network of growers, packers and shippers of fresh fruits and vegetables was exporting to Mexico and wanted to expand into new markets. Their challenge was twofold: ensuring domestic suppliers that they will be paid as Los Kitos expanded; and offering credit terms to new foreign buyers to be competitive.
The solution was a combination of working capital guarantee and multi-buyer export credit insurance products from EXIM Bank. Together, these products enabled Los Kitos to expand and they have now added Korea, Saudi Arabia and Hong Kong as trading partners.
Download the case study to read how a small business expanded their exporting to multiple trading partners using EXIM Bank solutions Los Kitos Case Study.