Setting sights on small-business exports
As U.S. pushes hard, owners are advised to understand options
By Matt Glynn
News Business Reporter
Originally Published: April 21, 2010, 6:56 am
President Obama has called for doubling U.S. exports in the next five years.
Small businesses will play a pivotal role in trying to reach that ambitious goal, since 70 percent of the companies that export have 20 employees or less, according to the U.S. Small Business Administration.
Exporting specialists say international sales opportunities are plentiful, but companies should know the risks, research their intended markets and explore financing options.
"Financing sometimes can really make a deal," said Thomas P. Cummings, regional director of the Export-Import Bank of the United States, an independent agency for the government. "You have a lot of buyers who don't have enough money to buy a product and they need to finance, or buyers who do have money and don't want to spend it."
Experts from the SBA, the Export-Import Bank, the Erie County Industrial Development Agency and other organizations talked about how to make exporting more accessible during a seminar presented by the ECIDA on Tuesday at the University at Buffalo's North Campus in Amherst.
Lynn M. Oswald, director of the Small Business Development Center at Niagara County Community College, suggested that companies examine how exporting might affect their cash flow, and how soon they expect a customer to pay them. "Have you really thought about how this will affect the money coming in and the money going out?" Oswald said.
Djuana Munn, who started a skin care products business called Creative Names seven years ago in Buffalo, said she is eager to step into exporting.
Munn's business imports raw materials that she turns into natural and organic products. Her target export market is the Caribbean, where she hopes to sell to spas and hotels.
Munn plans to make business trips to Bermuda and the Bahamas to establish contacts for later shipment of samples.
"Let's face it: In order to have a great business these days, you have to be in the global markets ... you just do," she said. "I want to be part of the global economy."
Selling internationally comes with risks. A customer might fail to pay or turn out not to be creditworthy. Political upheaval abroad can disrupt the payment process.
Export credit insurance is a valuable tool for protecting exporters against those costly problems, said Maryann K. Stein, director of international trade programs for the ECIDA.
Stein said Applied Fabric Technologies in Orchard Park, which specializes in systems to contain oil spills, has used export credit insurance to reduce its risk in global sales.
One example she cited was a contract that AFT had with the United Nations mission in Liberia. The mission did not want to pay in advance for the goods, and wanted 30 days after receiving them to pay the bill ... potentially risky terms for an exporter to accept.
Rather than let a competitor win the work on those terms, AFT took out an export credit insurance policy with the Export-Import Bank to mitigate its risk, Stein said.
AFT has also used export credit insurance to increase its sales in places such as Taiwan, South Africa, Australia and Egypt, she said.
Stein said export credit insurance can give companies confidence to move forward on making deals. "You don't have to turn down sales, because you're protected," she said.
For local companies just getting into exporting, Canada is a great first market, Stein said. "There's not a wide variety of differences in business practices."
Does Stein see more small businesses venturing into exporting?
"I think they're seeing that they have to," she said. "Just being part of the domestic market and just depending on that source of revenue just isn't cutting it anymore.
"They have competitors in Europe. The Europeans naturally grow up viewing the world as their marketplace. We've been kind of spoiled because the U.S. is always the No. 1 market destination.
"So, in a sense, we haven't really had to work to explore other markets because U.S. companies have been OK just selling domestically. But that's not the case anymore."
Stein added: "It's great to have a diversified portfolio in your sales, so that if something doesn't work out in the U.S., you do have South America to fall back on, or perhaps your European Union sales are strong."