Global Business Becoming Part of Entrepreneurial Strategy

Traditionally, international trade has been the prevue of larger businesses. But with many small- to medium-sized firms searching for new markets, increasingly more of them are looking outside the U.S. Many domestic markets have become stagnant. Growth opportunities beyond the domestic borders are becoming more attractive for companies of all sizes.

More than 95% of the world’s population and two-thirds of global purchasing power are outside the U.S., yet less than 1% of the nation’s 30 million businesses export. Small- and medium-sized companies are 97% of U.S. exporters, but they only account for about 30% of all exports.

Many U.S. companies stumble into their first international ventures. It is common for people from other countries to contact a firm about its products that were found online or during a visit to America. For most U.S. companies, whatever additional business these contacts create is as far as they go in pursuing international business.  

However, more companies are making international trade part of their strategic plans. Technology is one of the major drivers of the expansion of trade. Aside from the Internet which has made buying and selling products anywhere possible, technology has also created dramatic improvements in transportation, banking, and other forms of communication. These services are no longer just available to larger organizations and are being used by small companies to become more proactive about their international strategies.

Thinking About Exporting

These improvements have made doing business outside the U.S. easier, but there are still obstacles along the way. Entrepreneurs need to be aware of differences in laws, culture and economic systems to name a few. Tariffs and quotas top the list of laws to research for most companies before considering entering a market.

“Exporting is not rocket science; it’s not harder than doing what they (small businesses) already do,” said Tim Sword, an export-assistance manager for the Ohio Development Services Agency. “But it does require a little more attention to detail, which requires someone to focus on it.”

“The simple reason that entrepreneurs would be wise to consider looking outside of the U.S. is because that is where their new customers are emerging. When you look for the new populations of people with increased purchasing power, you are going to find them in Asia, South America and in pockets all around Europe and Africa,” Sword stated.

Help for Hurdles

One of the biggest hurdles for U.S. exporters is finding good partners in the country in which they want to do business. Most small companies enter international markets by exporting through distributors in the host country. The entrepreneur must be able to vet those foreign partners. Obtaining information about a potential partner outside the U.S. can be difficult.

Entrepreneurs interested in entering foreign markets have help available from both the federal and state governments. The U.S. Department of Commerce provides free services to anyone interested in exploring non-U.S. markets. In 2010 the Obama Administration launched the National Export Initiative that was aimed at doubling the level of exports from 2008 to 2015. The top priority of this initiative is to increase the level of exports by small- to medium-sized businesses. Similar services are offered by the State of Ohio to companies wanting to engage in exporting.

The Ohio Development Services Agency for which Sword works is one of those agencies. “Pursuing international business has long been an initiative of both state and federal governments. The result is a deep and wide network of experienced export assistance available to new-to-export companies. The state of Ohio alone has eight overseas offices that can help Ohio companies gain market intelligence and targeted buyer and importer contacts in 35 different countries,” according to Sword.

Sword added that while there are great opportunities for Ohio and U.S. companies to sell internationally, it is imperative that these organizations have leaders and company-wide support for being an international supplier. The export success of far too many companies has been limited by a lack of support of international efforts from within the organization.

For more information, Dr. Haan can be contacted at 419-618-2867 or haanpc@tiffin.edu.

Perry Haan

Dr. Perry Haan is Professor of Marketing and Entrepreneurship, and former Dean of the Business School at Tiffin University. He resides in Rocky River.

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Volume 1, Issue 8, Posted 2:31 PM, 02.06.2014