Just a few months ago, U.S. Secretary of Commerce Penny Pritzker revealed that the United States had reached a record for exporting in 2014—$2.35 trillion to be exact. And, perhaps better yet, this was the fifth year in a row that we’ve continued to raise the bar. [Source: U.S. Department of Commerce].
This may make you wonder whether you should be exporting your own goods and taking a piece of this over two trillion dollar pie. While this is certainly one way to grow your business if you’re not already sending your merchandise out of the United States, here are three very important factors to consider before you make that type of commitment:
Whether It Would Actually Benefit Your Business to Expand Globally
Although some businesses do very well expanding globally, others don’t fare so well. To determine where yours would fall, the U.S. Small Business Administration (SBA) recommends that you create a list of benefits that are “based on your current assumptions about 1) your company, 2) your company’s products and 3) market knowledge.” This helps you see not only the advantages you stand to gain by shipping your goods outside the United States, but the disadvantages too.
For example, one benefit of exporting is that it would increase your customer base allowing you to hit a larger number of people in your target market. However, one drawback of taking this step is that you may have to expand your operations to be able to handle increased distribution and would need some amount of capital up front.
By going through this exercise of listing pros and cons of exporting, it enables you to see whether there are more positives than negatives or vice versa when it comes to your small business in particular. It also forces you to take a good hard look at whether there are some disadvantages of exporting that you’re not ready (or willing) to contend with.
Whether There Is a Market for Your Goods Outside the U.S.
Remember that just because your products may be jumping off the shelves here, it doesn’t necessarily mean that they’re going to do as well in other locations. For example, while Coca Cola and McDonalds seem to flourish in a number of other countries, other companies such as Wal-Mart, Home Depot, and Best Buy haven’t been so fortunate. This has cost them billions of dollars in the end, also somewhat damaging their reputations in some people’s eyes [Source: HSBC].
That’s why the Department of Commerce recommends that you take the time to research this issue prior to making the decision to export. Specifically, they suggest that you try to locate suitable markets for your business and “have a well-defined strategy for approaching them.”
This involves deciding beforehand how you intend to market your goods in the new geographic locations. It requires answering the question: why should they buy from you versus purchasing from someone more local?
What the Regulations are Regarding Exporting Your Particular Products
Any time you deal with sending anything across country lines, there are going to be regulations in place telling you what you can and cannot do. That’s why it helps to make yourself aware of this type of information beforehand. Some areas to research include regulations relating to your specific product, the specific location you want to ship to, and also the specific market.
FedEx further suggests that you think about “how your product functions, how it’s made, what kind of certifications it might need and more.” Depending on what it is you manufacture, you might have to revamp it a little (or a lot) to get it to meet the specifications in the country or market you wish to export it to.
Considering these three factors before deciding whether to export your goods will help you make a better decision for your small business. Are there any other considerations you think need to be added to the list? Feel free to put them below!
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