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The Accidental Exporter: Calculating the Opportunities and Risks
February 20, 2018 Suhail Karim Beg, Business Development Specialist, Office of Small Business

Thanks to multi-channel marketing, national boundaries no longer limit customer choice. A customer can hear of your product via a mobile app, an online catalog, social media, or search results in their browser. A U.S. firm that has never exported before may suddenly find themselves with a foreign buyer in a country they have never heard of. Even a seasoned exporter can be caught off-guard by an order from a country not specifically targeted in their export strategy.

A sale is a sale, a win-win situation. Perhaps, but it could also be an opportunity warranting further investigation if you want to maximize potential revenue opportunities while minimizing the risks.

Calculating the Opportunity: The Pros & Cons of the Sale

Not to be a downer on your first international sale, we will start with a list of the some of the pros of the sale. It presents the exporter with an;

 

  • Opportunity to diversify revenue streams to offset domestic business cycles
  • Opportunity to enter an untapped market
  • Opportunity to grow the business allowing you to compete more efficiently domestically
  • Opportunity to build your brand awareness

 

Here is the rub, how do you realize these opportunities while minimizing the cons, such as the risks of,

 

  • Inadequate buyer due diligence
  • Non-compliance with domestic export and foreign import regulations and taxes
  • Over pricing or under pricing your product or service due to inadequate market research
  • Nonpayment due to bankruptcy or government restrictions on foreign exchange

Affordably Balancing the Risks

 

Entering a new market requires a significant investment of resources to research the market, understand your competition, measure the growth potential, and identify distribution channels available for your product. The good news is that the U.S. Commercial Service provides U.S. exporters with affordable industry and country specific market assessments. They also provide background checks for cost effective due diligence on the buyer. Check out some of their low cost for fee Services for U.S. Exporters such as:

 

  • Gold Key Service – matchmaking appointments
  • Initial Market Check – market potential assessment
  • International Company Profile – full background check / partial background check
  • International Partner Search – pre-screened business contacts
  • International Partner Search - Virtual Introductions
  • Featured U.S. Exporter listing – (Five markets)
  • Business Service Provider – web listing of export services for one category
  • Single Company Promotion – promotional event
  • Trade Show Representation
  • Certified Trade Missions
  • Single Location Promotion
  • Facilitated Investment Mission / Roadshow
  • International Company Profile – full background check / partial

The Safe Sale

You may be eager to make that “accidental sale” but a bit of due diligence on the buyer is always advisable. If you are unfamiliar with the type of information required for an adequate credit assessment, check out this blog by one of EXIM Bank’s Trade Finance Specialists, “5 Tips for Basic Credit Checks on International Buyers". If this is a one-off sale or a potential repeat buyer, no matter how small the transaction size, you still want to receive payment and that will depend on how well you assessed the risks involved up front.

You could demand cash in advance and avoid any risks and a lot of hassle. However, demanding cash in advance might also lose you the sale. Alternately, offering credit terms of 60 to 90 days will leave you exposed to nonpayment risk. Maybe you tried to get insurance but coverage was not available in the private sector. Good news, you have low cost options to protect yourself from nonpayment and grow your sales, EXIM. At EXIM, no business or transaction is too small. We offer a variety of insurance products tailored to provide your small business with the nonpayment protection to make the sale safely, no matter how accidental.

Many of the blogs we write deal with U.S. Government resources available to help address risks associated with becoming an “accidental exporter”. If you are new to our Export Finance Solutions blog, take a moment to scan them for topics that interest you or are relevant to your business or industry. We have something for everyone and the links to resources that will get you the answers you need now.

Your export solution is only a click away. Request a free one-on-one consultation with one of our Trade Finance Specialists by clicking on the link below.

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