Doing business around the world can seem a long way from doing business in your hometown. But each year countless small businesses make the trek. Like most long journeys, going global can be boiled down to a series of steps.
Here are the six basic steps to going global:
- Start your campaign to grow by international expansion by preparing an international business plan to evaluate your needs and set your goals. It’s essential to assess your readiness and commitment to grow internationally before you get started.
- Conduct foreign market research and identify international markets. The Department of Commerce is an excellent source of information on foreign markets for U.S. goods and services.
- Evaluate and select methods of distributing your product abroad. You can choose from a variety of means for distributing your product, from opening company-owned foreign subsidiaries to working with agents, representatives and distributors and setting up joint ventures.
- Learn how to set prices, negotiate deals and navigate the legal morass of exporting. Cultural, social, legal and economic differences make exporting a challenge for business owners who have only operated in the United States.
- Tap government and private sources of financing-and figure out ways to make sure you are getting paid. Financing is always an issue, but government interest in boosting exporting and centuries of financial innovation have made getting funding and getting paid easier than ever.
- Move your goods to their international market, making sure you package and label them in accordance with regulations in the market you are selling to. The globalization of transportation systems helps here, but regulations are still different everywhere you go.
The role of culture
One big difference between doing business domestically and internationally is culture. According to Hilka Klinkenberg, founder of Etiquette International in New York City, less than 25 percent of U.S. business ventures abroad are successful.
“A lot of that is because Americans don’t do their homework or because they think the rest of the world should do business the way they do business,” she says. Klinkenberg offers the following tips to avoid making costly mistakes in international business meetings:
- Build a relationship before you get down to business. “That entails making small talk and getting to know one another without [immediately] getting into business discussions,” she says.
- Don’t impose time limits. Says Klinkenberg, “Keep [the meeting] as open as possible because it adds strength to your negotiating position.”
- Do your research. Learn at least a few pointers and facts about the country; it shows you respect your potential partners’ cultural heritage. Also, get comfortable with the basic words in their language.
- Bring your own interpreter. If they provide the interpreter, warns Klinkenberg, “the interpreter is going to have the other person’s [interests] at heart, not yours.”
- Understand body language. “People think [body] language is universal-it’s not,” she says.
- Dress with respect and authority. This should be self-explanatory. If it’s not, seek the help of an image expert.
The role of banks
As with any growth plan, expanding internationally requires financing. And growing globally requires special capabilities when it comes to finances. One of the most popular sources of financing for businesses expanding overseas is the Export-Import Bank of the United States.
The Ex-Im Bank, as it’s commonly known, is an independent U.S. government agency that has helped finance overseas sales of more than $300 billion in U.S. goods and services since 1934.
The Ex-Im Bank guarantees working capital loans for U.S. exporters and guarantees repayment of loans or makes loans to foreign purchasers of U.S. goods and services. It also offers U.S. exporters credit insurance to protect against nonpayment by foreign buyers.
To get Ex-Im Bank help, your product or service must have at least 50 percent U.S. content. The bank will finance the export of all types of goods or services except for most military-related products.