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Unleashing the Global Giant

August 2014

How to Transform Any Small Company Into an International Powerhouse

Steve Blue

Steve Blue

There is a huge market for American manufactured products outside of the United States. Yet, most small- to mid-sized companies don’t sell in these markets despite being perfectly capable of achieving success around the world.

Is your company ready?
If you go into international markets, it will require a significant amount of time and expense. Is this time and expense better utilized chasing domestic business? You shouldn’t go off chasing international business unless you are satisfied there isn’t any juice left in the United States orange.

Are your products adaptable for international markets?
You can’t afford to adapt your product to suit every local market. So you need to be sure that your product can be used in markets you select with minimal adaptation and support. To understand this, you need to do some market research. If you don’t have any contacts or information on the markets you are interested in, then you can get help from the Federal Government, including www.trade.gov/cs/ and www.export.gov.

What is the market size and condition of selected international markets?
Assuming you have uncovered markets that can use your product with minimal adaptation, what is the market size and is it fragmented or concentrated? When choosing your international markets, be sure to choose markets with customer concentration and reasonable infrastructure.

Are you ready to invest significant time and money with no return for several years?
Starting your sales effort in any international market will take time and patience. A good rule of thumb that I have learned is it takes about two years, on average, from first contact to first sale.

How will you market, sell and distribute your products?
On the marketing and sales side, your first choice will be whether you use an exporter, a local agent or a distributor. Each has its unique advantages and disadvantages. Exporters will buy and resell your product in the market. A local agent will represent you for an agreed-upon commission. A local distributor will act much like an exporter and will take title to your products. Using a local agent will yield the most profit and market intelligence of all your choices. They are also the hardest to manage, and it is very difficult to find a good one.

Do you know the laws governing export?
Be certain you understand the U.S. laws that govern exporting and the laws of the country you wish to sell to. As you can imagine, these laws are not the same and, in some cases, are actually in conflict with each other. Visit www.export.gov for information concerning U.S. export laws and also be mindful that there are certain “blacklisted” countries you can’t sell to at all. The agency that regulates this is Office of Foreign Assets Control (OFAC). You can learn more at
www.treasury.gov.

Will you denominate your products sales in local currency or the U.S. dollar?
Your first choice would be to make your sales in U.S. dollars. However, you may not always be able to do it that way. Do not denominate in local currency unless it is a major one that has some stability and predictability. Even then, if your sales are high in dollar value, negotiate with the customer for stop losses if the variation goes unfavorable or have a very short time between delivery and payment.

How well do you understand the market and how much international experience have you gained?
Avoid large tenders until you really understand the market and have a substantial amount of international experience. Many foreign companies aggregate purchasing needs for an extended period (6 months to a year) and place what is called a tender for all of their needs during the period. They also require bid and performance bonds be placed with an international bank.

Are you prepared to travel to this market many times of year?
Once you have made the commitment to develop a market, you will need to travel there many times. It is important to get to know the best practices of international travel. You will need a U.S. passport, a business visa and proper vaccinations.

Are you aware of the cultural differences and how to leverage these in your local business relationships?
American business people tend to place a high value on getting things done fast. When it comes to the rest of the world, the relationship is almost more important than the business conducted. Other cultures place a high value on the relationship and they are suspicious of anyone who does not. It takes time to build the relationship. You have to be there, face to face, time and time again.

With more than three decades of management, executive, consulting and speaking experience in markets all over the world, Miller Ingenuity CEO Steve Blue (www.StevenLBlue.com) is a globally regarded business growth authority who has transformed companies into industry giants and enthralled audiences with his dynamic keynotes. In his upcoming book, “Outdo, Outsmart… Outlast: A Practical Guide to Managed, Measured and Meaningful Growth,” he reveals why seeking growth and surviving growth are equally perilous, and require different sets of plans to weather the storms. Follow Steve @MillerIngenuity. I95

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