Find Out If Your Business Is Ready To Export — And How To Start
Considering growing your business through exporting? It’s a great move… there are over 220 potential markets outside the United States, with billions of customers in the global marketplace who might be eager to buy what you have to sell. Plus, studies have shown that businesses that ship internationally are more likely to succeed over the long term, partially because they are hedging their exposure to downturns in the domestic market.
Clearly, exporting could benefit your company. The question is, how do you begin? This article is a great starting point.
Just follow the simple steps listed below to help evaluate whether or not your company is properly prepared for exporting, and to find more information on how to start. If you have any questions, call your FedEx account executive for more information. If you don’t have an existing FedEx relationship, you can open a new FedEx account online in just minutes.
Step 1: Determine your exporting IQ
Step 2: Explore your opportunities
Step 3: Determine your strategy
Step 4: Taking your product to market
Step 5: Identify regulatory requirements
Step 7: Get started exporting
Just because you have a product or service to sell globally doesn’t mean your business is ready to start exporting. There are important steps to take to prepare your business for success. Some of them are fairly self evident, but others are more complex.
For example, is your management team ready to provide training to your employees who are going to be involved in exporting? Are your executives dedicated to providing the same level of service to foreign customers as they are to domestic customers… even though there might be cultural differences or language barriers? Are you financially capable of exporting? Do you understand the legal requirements of doing business in specific markets?
To help prepare yourself for issues such as these, use the resources below to determine your business’s exporting IQ and to discover advanced exporting knowledge that can help your business succeed:
- An Export Readiness Online Questionnaire from export.gov, sponsored by the U.S. government.
- Exporting Educational Events and Programs from FedEx, including Exportech™, an acceleration system that can help you achieve profitability faster.
- National District Export Council (DEC): Find an exporting mentor, read case studies and browse informational articles
Once you have a handle on your export readiness, it’s time to explore global opportunities. You can view regional snapshots from FedEx to help you get started.
Begin by clearly defining the strengths and weaknesses of your product or service. What are your unique selling points? What sets you apart from the competition? Where are your competitors doing business abroad? Are there cultural sensitivities that will require big changes to your products, its marketing or even the materials you use? Answering questions like these can help you pick out the foreign markets that are right for you and put a business plan in place to reach them.
Consider tapping into the U.S. Commercial Service (USCS) for assistance in identifying the best markets for you. While conducting market research can be prohibitively expensive for some businesses, the USCS can offer help, usually at a relatively inexpensive cost.
Here’s another consideration: What existing relationships do you have in that market? If none, how easy or hard do you anticipate it will be to build new relationships? As with many other things in business, the relationships you start and maintain with your suppliers, distributors and customers are going to be the gauges of your success… and factors in the business plan you put into place.
It’s important for you to know that different markets may require different business models and business plans. Some markets will have deeply rooted business cultures that will define your path to opportunity, for example through franchising. To maximize your window of success, be flexible and choose the market that makes the best business sense for you. Consider enrolling in Export University or an ExporTech program to learn more about picking a market and putting a plan in place to reach it.
Consider picking a market where English is either common or the language of choice. If that’s not possible, you might want to take a language course or offer the opportunity to your employees to help them feel more comfortable with their new customers and business partners.
Finally, it might be to your advantage to start out with countries that have a free trade agreement (FTA) in place with the U.S. These agreements can help you save an enormous amount of time, money and effort by simplifying the regulations and costs involved with exporting. Learn more about FTAs at the USCS, and at the International Trade Administration.
As a business owner, you’ve undoubtedly learned that relationships are crucial. After all, often times it’s not what you know, it’s who you know, especially as a small business, where every single customer is so important.
Exporting is no different. The relationships you build and nurture are going to be the keys to your success. An ideal starting point is to reach out to the cultural chambers or organizations that maintain presences in the U.S. For example, if you want to start shipping to China, the China Cultural Exchange could help you make the necessary contacts. To find these organizations, check with your Local Chamber of Commerce, the U.S. Chamber of Commerce or the U.S. Export Assistance Center.
Two of the obstacles you’ll need to overcome are cultural differences and language barriers. For example, here are resources to help:
- Tap into the knowledge and experience of a mentor from the DEC.
- Use country-by-country profiles that can help you learn more about your potential market at www.export.gov or at The American Chambers of Commerce Abroad (AmChams).
- Consider attending an Export University or ExporTechTM course to learn about the different business models.
Also, determine if your manufacturing process will need to be changed to accommodate foreign markets. Take advantage of the partners and resources that are available to help, including the National Institute of Standards and Technology’s Hollings Manufacturing Extension Partnership (MEP), which can help you save time and money when manufacturing for export.
You’ve got a great product to sell. Now it’s time to let the world know about it. Just like in the domestic market, your advertising and marketing is going to help you reach new customers. You can take your product to market by:
- Determining which kinds of marketing materials will work best for you. In many cases, it’s likely to be the same general types that have worked well on the domestic stage. Consider a website, direct mail or print advertising. Don’t forget trade shows… they could be an invaluable resource for making international contacts. You can find a listing of trade shows at the USCS website.
- Reserve your domain name in the countries you plan on doing business in. Most countries have their own version of .com, called Country Code Top Level Domains. For example, Canada uses .ca and China uses .cn. Reserving domains is relatively inexpensive, and you can simply have the foreign domain redirect back to your domestic site if you don’t want to put up multiple sites.
- Speaking of websites, determine if your website will need to be translated for foreign customers. If so, you’ll want to contract with a reliable translating service to make that happen.
- Consider using turn-key storefront sites like Amazon.com and ebay.com as easy to implement solutions for building an online presence in global markets. Thousands of small businesses have used this strategy to great success.
- Ensure you have calculated your landed cost before negotiating price points with your buyers. This research should include competitor pricing.
Don’t allow different regulatory environments to stop you from exporting. If you do your due diligence up front and have a clear understanding of the regulatory requirement for exporting your products, you’ll become more efficient, more successful… and much better at keeping your customers satisfied.
Regulatory requirement are both country and product specific. Requirements for the same product may be different for each country you are considering selling to. The most accurate information on product-specific requirements, including required documentation and duty/tax rates, can be identified when researching the product using the Harmonized Tariff Code (HTS) that most accurately describes your product. A binding ruling documenting the correct code for your product can be issued from U.S. Customs and Border Protection. You can locate HTS information online using FedEx® Global Trade Manager.
In addition, you should consider the regulatory requirements of the market you’re entering. Consider how your product functions, how it’s made, what kind of certifications it might need and more. Take a look at these case studies to see how other small business owners have tackled this challenge.
If you are experiencing current regulatory issues with your exports, this information may be helpful. http://export.gov/tradeproblems/index.asp
More trade success stories from today’s successful exporters can be found here. http://export.gov/articles/successstories/eg_main_022608.asp
Here are additional resources that can make handling regulations much easier:
- Country-by-country profiles at the FedEx International Resource Center
- The USCS, the Bank For International Settlements and the U.S. Customs and Border Protection can all support small businesses dealing with exporting regulations.
- The FedEx Know and GrowSM Export Education Program, a series of events hosted by the USCS that can help you learn more about regulations.
- Regulatory alerts from FedEx that can help you stay on top of regulations that affect exporting.
- FedEx Global Trade Manager is an excellent place to find market specific regulatory info, identify HTS codes.
- Advocacy assistance from the USCS. The Advocacy Center works to coordinate government resources to ensure that American business can compete on the international stage.
- Learn more about Harmonized Tariff Codes. http://export.gov/logistics/eg_main_018119.asp
Before exporting, it’s crucial for you to safeguard your business’s intellectual property, including brand names, trademarks patents, and copyrights. Protection in one jurisdiction generally will not extend to other jurisdictions. Different countries have different filing requirements, so it’s a good idea to consult with an attorney with international experience before entering foreign markets.
Remember, a single filing will not protect your business globally. Use the resources below to familiarize yourself with intellectual property protection:
- Find out more about Intellectual Property Rights protection.
- Read this article about protecting trademarks, patents and copyrights outside of the U.S.
- Contact the Intellectual Property Rights Center in the event you identify an infringement: IPR Center Hotline (1-866-IPR-2060 or 1-866-477-2060) or via email at IPRCenter@dhs.gov
If you’ve decided that exporting can lead to business growth and you’re ready to continue the journey, it’s time to develop the following components:
Evaluate your internal exporting IQ: For small businesses, where staff is already often operating at (or over) full capacity, being efficient is a critical best practice. Today’s online tools and resources provide easy access to the information you need to maximize your efficiency. For example, using services from fedex.com and FedEx Global Trade Manager can help you save time every time you ship.
- Determine your landed costs. This refers to the total cost of a product when it reaches its buyer. So it should include shipping costs, regulatory costs, tariffs, brokerage costs, financing/letters of credit, insurance/declared value, packaging, and more. When you factor accurate landed costs into your growth plan, you are better positioned to then calculate your overall sales projections and profit margins. You will also be better prepared to meet with your local banker, the Small Business Administration and the ExIm Bank in the event your growth plan will incorporate financing or credit insurance assistance.
- Define your terms. Incoterms are the terms under which the transfer of goods will take place, and will need to be agreed upon with your buyer. Understanding the terms and reaching an agreement with your buyer on the terms of sale for your goods will help you define additional costs that you may incur. If there are additional costs, they should be factored into your landed cost calculations. The International Chamber of Commerce (ICC) publishes a set of rules and standards that are generally accepted around the world. Learn more at Export.gov, or view this informational webinar.
Secure your financing. If you’re going to seek to finance your exporting expansion from a bank or a venture capital firm, you’ll need to have a solid business plan in place. Typically, your lender will want your costs to be clearly defined and thoroughly researched, including sales projections and profit margins. Resources available to help include:
- The Trade Finance Guide from the U.S. Government.
- The U.S. Government’s Export Import Bank (Ex-Im) for info on loan guarantees.
- Your local banks that might have special programs or offers for doing business internationally.
- FedEx Global Trade Manager, which can help you estimate landed costs. https://www.fedex.com/GTM?cntry_code=us
- Ensure you’re in compliance. You’re ready to export your products. Now, make sure you actually can. Double check to ensure you have the proper paperwork and licenses in place to export to your new market, and make sure you’re permitted to sell to your particular buyer (check denied parties list). Implement an export compliance plan to keep your company prepared to meet the mandatory requirements. Use these resources:
- Complete your documentation.Once your shipment is ready to go, you’ll need to complete the paperwork. Since you have already done your regulatory research for the products you’re shipping in the specific country, you should now have the Harmonized Tariff Code number, and should be aware of the required documentation. You’ll typically need to complete waybills, NAFTA certifications (when applicable), commercial invoices and certificates of origin. Remember that correctly labeling your shipment is going to be crucial to avoiding delays and ensure that your shipment is efficiently handled by the broker and customs officials. Correct information ensures that the duty/tax rates are correctly applied. FedEx Global Trade Manager has tools that can help you with the paperwork and provide the convenience and cost-savings of filing electronic trade documents (ETDs).
- Detail contained in shipment documentation is the key to efficient clearance with minimal delays. With today’s online capabilities, documentation can be processed quickly with features that include downloadable templates, information look up, storing recipient information and paperless submissions. Plus, there are online features that can help you stay compliant when your commodity is valued at $2,500 or more, including the ability to file online with Census.
- Note that the waybill is the contract between you, the shipper and the carrier. This is used to provide instructions on when to move the shipment, how to move it (what service/speed), who to deliver it to (consignee) who to bill for transportation and who the importer is, which specifies who to bill for any assessed duty/taxes.
- Note that the Commercial Invoice is the document that the Customs Broker will use to identity the details of the goods and present the entry to Customs. It should contain:
- A full description of the product, quantity, value for customs, weight, HTS code
- Your ‘ship to’ party information — end consignee — the person or company receiving the goods.
- Your ‘Importer or sold to’ party information if other than your end consignee.
- Your importer’s tax ID number
When filling out your Commercial Invoice you should:
- Determine who will pay for the transportation charges: You. The shipper? Your ultimate consignee? Your importer (not your end consignee) as a 3rd party payer? Review your Incoterms to determine when ownership transfers to your buyer to assist you.
- Determine if you want to declare additional value on the shipment above what is already covered.
- Determine if you want your shipment to move with brokerage included, or if your importer will want to designate their own broker.
- Check for any alerts. As a final step, double-check your exporting plans against the U.S. Customs and Border Protection website to see if there are any regulatory alerts or warnings you should be aware of. You can also check on the FedEx website as well.
- Think about samples, returns and exchanges. If your business regularly provides samples to prospective clients, consider how you’re going to handle that for international clients. It’s a good idea to plan a strategy for returns and exchanges. Here are some common issues you’ll need to find solutions for:
- Which mode or service will be used for the return? What is your policy and process? Should you have it explained on your website or included with your packing slip?
- Do you know how to import your product back into the U.S.? What are the importing requirements? Can you pass a customs audit?
- Will you simply re-ship a new product if there’s a problem with the original?
- How will you handle products that are under warranty and needs to be returned for repairs? When using express services, they are broker inclusive.
- When will you need to designate your own broker? Who will handle the document preparation?
- Who will pay for the original shipping costs? Who will pay for the return shipping costs?
- Will you require a return authorization before accepting the returned shipment?
- Start exporting. Now that you’re ready to start, use FedEx Global Trade Manager to make it easier to create your labels, track your shipments, manager your paperwork and more.
If you have any questions or need help with samples, returns or exchanges, please contact your FedEx account executive. Don’t have a current account? You can set one up online in just minutes.
Remember, when it’s time for your business to start exporting, FedEx is on your side. We offer time- and money-saving services and solutions and the expert advice that can help your exporting efforts succeed. Contact us anytime if you have any questions – we’re ready to help, and the FedEx Know and Grow program is ready to help you increase your exporting IQ.