Your business is growing and you have seen great opportunities outside the United States. Perhaps you have even received interest and inquiries from abroad. Now you want to leverage this opportunity and become a successful exporter. An important question comes to mind – am I ready to export?
Chris Van Orden, an international trade specialist with the Virginia Small Business Development Center (SBDC), helps small businesses assess their export readiness. During our conversation we discussed:
- What the Small Business Development Center (SBDC) is and how it can help
- The four conditions for global success
- The top things that successful exporters do or have in place
- A systematic approach to choosing export markets
EXIM: Hi Chris, thank you for taking the time to talk about export readiness. Please, tell us about the Small Business Development Center (SBDC).
Chris: We are dedicated to helping Virginia’s small businesses thrive by providing free technical assistance and direct consultation on a wide array of critical business needs. In particular, our international trade program exists to support small businesses around the Commonwealth on their journey to export success.
EXIM: In your experience, what must a small business have in order to improve their chances for global success?
Chris: While successful exporters come in all shapes and sizes, they all have four things in common. We refer to these as the four conditions for global success:
- Management commitment – top-level decision makers must be invested in the export program and communicate that commitment throughout the organization;
- In-depth experience with the product or service – learning the ropes while exploring international markets is never advisable;
- Adequate cash flow – establishing presence in a foreign market requires an investment, so companies must have enough funds on hand before looking overseas; and
- Capacity and capability to produce international products or provide the service – it sounds self-evident, but companies must be able to deliver their product or service in a format appropriate to the market.
EXIM: Do programs exist that can help a small business increase their cash flow to become export ready?
Chris: The Small Business Development Centers are always available to provide small businesses with tools and guidance to improve their financial situation. Click her to find your local SBDC.
We help small businesses with:
- Programs directly focused on international trade
- Counseling in exporting, market research, business planning, and more
- Training in international business development
- Connections to resources at the local, state, and federal level – including the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed by Congress on March 27, 2020 (The Small Business Owner’s Guide to the CARES Act)
We are also a member of EXIM’s Regional Export Promotion Partner (REPP) program. This allows us to identify where our clients can benefit from EXIM’s products (e.g. Export Credit Insurance and Working Capital Loan Guarantees).
EXIM: Are there programs or products that can help small businesses access funds to increase their capacity and capability to produce products for export?
Chris: Absolutely, there are great federal government resources that assist exporters with their capital needs. Both EXIM and the Small Business Administration provide working capital loan guarantees, which enable small businesses to access working capital loans from commercial lenders.
EXIM: Earlier you spoke about the “four conditions for global success”; are there additional processes, experiences, or other examples of what successful companies can do to develop a thriving global business?
Chris: Every successful exporter starts with the four core conditions we mentioned earlier. Beyond that, there are no hard and fast rules, but companies that tend to be better equipped to sell internationally tend to have:
- Experience working with multiple partners (vendors, distributors, wholesalers, etc.)
- Sales into multiple U.S. states
- Sufficient production capacity
- A plan for managing logistics and reporting
- A strong sense of international profit model
- A short list of target markets
EXIM: How should a small business approach the selection of an international market?
Chris: Selecting target markets can feel chaotic – the world is a big place. We find that it’s best to apply a systematic approach when weighing options.
- Decide what matters to your business (scale, ease of doing business, price tolerance, etc.)
- Find good metrics from reliable data sources that tie to your values
- Pull data for each country and weight factors by importance
- Assess top markets analytically – literally ranking your top markets
- Apply qualitative elements to the selection process
This final point shouldn’t be skimmed over. Data-driven, decision-making can be extremely helpful, but so much of business comes down to interpersonal factors. Businesses should always leave room for the human element in their analysis.
EXIM: Thank you for all the great information, Chris. How can a small business learn more?
Chris: Small businesses interested in exploring international sales can reach out to their state’s to learn more. The SBDCs have a wealth of resources and are well-connected to other organizations. With the support of federal, state, and local partners the prospect of exporting doesn’t have to be overwhelming.