Tag Archive for: Business Growth

Exporting

How to Grow Your Small Business by Exporting

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According to the U.S. Small Business administration, “Two thirds of the world’s purchasing power is in foreign countries.” On average, U.S. exporters grow faster than non-exporting businesses. Exporting can help small businesses diversify and become less reliant on the U.S. economy or income from any single region. However, there are some risks involved like sudden increases in tariffs during a trade war or countries copying your product to sell locally.

 

What is exporting?

Exports are goods and services produced in one country and then sold to a buyer in another country. Exporting is an easy way to access the buying power of international markets. Exporting is an excellent way to create a sustainable business model.

 

When should I consider exporting?

Looking to grow your small business and develop a diverse source of income? Exporting may be a good choice.  U.S. made products are typically of higher quality than products made elsewhere. If your product is in high demand, the sooner you begin exporting the better. Consider the following:

  • The U.S. exports nearly two-trillion dollars’ worth of goods and services annually.
  • Ninety-five percent of the world’s consumers are located outside the U.S.
  • With today’s technology, access to exporting can be easy. E-commerce through the internet, improvements in logistics, free trade agreements with twenty countries and a slew of government export assistance makes exporting achievable for small businesses.
  • Exporting can be profitable. On average companies that export make more than their non-exporting competitors. Sales grow faster, and companies that export tend to see less economic fluctuations or seasonal selling as their business cycles smooth out.
  • Companies that export become more valuable should selling the business be a consideration.
  • Companies that export are more likely to stay in business.

 

Which businesses are best for exporting?

Some of the top exported items are agriculture, clothing and textiles, beauty products, meat and seafood, machinery, chemical products, and petroleum products. It has been proven time and again, that US exports are popular world-wide. If your product has even a moderate interest in the US, chances are it will sell world-wide as well.

 

What are examples of exports?

Ben and Shelby Stilltender make a superb sour mash bourbon. With a recipe passed down since the days when Ben’s grandfather first began making moonshine, the liquor is prized by fine restaurants and retailers across the country. A few years back, a diplomat from Spain discovered the drink during a visit to the U.S. Upon his return, he contacted the Stilltenders and arranged to buy a case of bourbon to be shipped to his home in Barcelona. Never having done this before, Ben and Shelby contacted an export management company or EMC to take care of all necessary paperwork and arrange shipping. Additionally, the EMC sourced out a distributor in Spain and the Stilltender’s one-time order turned into full time exporting. Seeing their profits soar, they began exporting the bourbon to eight different countries.

Other examples of exporting are wheat farmed in the U.S. and then sold to China. Jet engines produced by the Boeing company and sold to buyers around the world.

 

How do I export my business’ products?

The Small Business Association (SBA) can help you get started with exporting products and services. They can also offer loans and working capital if necessary. Paris SBDC is also here to help, check out our resources section on exporting for the following:

Export Management Companies (EMC) are a resource as well. They typically charge a fee or collect a percentage of the exported item.

The government has a list of programs designed to bridge new markets and help small businesses find international buyers.

Before choosing to export a product or service, read through the government’s export regulations at the US Export Regulations Website. This may help you determine if you have a suitable item for export as well as offer guidance on how best to start exporting. There you will also find information on licensing, tariffs and more.

Another resource to help you get started is the International Trade Administration.

 

For additional information or resources on how to export goods in your small business, or on how to grow your exporting business, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

 

Surviving National Retailers (Walmart, Sam’s, Costco)

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Yesterday, in our online class: Surviving Amazon, we talked about how to compete in business against the retail giant. In today’s blog, we’ll give you more tips on how to survive against other giant box stores like Walmart, Sam’s Club, or Costco.

As a small business owner going up against a giant retailer, the odds of surviving may seem daunting especially while trying to grow a thriving company when they move into your town. To win you must be clever and find your niche. After all, with a little rock David took down a giant.

 

How can I compete against national retailers like Walmart, Sam’s, or Costco?

Going head-to-head in a pricing competition with identical if not similar products rarely works in favor of the small business owner. The purchasing power of big retail stores allow them to buy goods cheaper and undercut smaller companies by controlling the product and pricing. To beat the odds, think more about what your company does well and less about the pressures of the competition.

 

Studying the big box stores for weaknesses can help you find your strengths:

  • Use this comparison to your advantage: For Stephanie, who owns a successful clothing boutique, it was not about offering a cheaper blouse in different colors but sourcing a well-loved local designer and collaborating on a unique clothing collection unavailable to big retail.

Up your service game:

  • If you’ve shopped at the large retail stores, it is easy to wander aisle to aisle and not find what you are looking for, let alone someone to help you locate that obscure little thingamajig with two prongs and a yellow knob. Often, a great shopping experience is about ease, convenience, and a friendly face to help as needed. As Jenny, the design showroom owner found, small things count. Her colorful, well-designed shopping environment, filled with flowers, brought clients in. Fresh cookies and a bottle of special tea to snack on, keeps them coming back.

Specialize by finding your niche:

  • When the big box stores offer nearly everything under the sun, sometimes you must lift a rock or two to discover what they cannot provide. Think of it as the fine art of competing against the bigger stores. Like an artist creating a painting, each creation is one of a kind. That uniqueness when mass produced and sold cheaply loses its value to a more discerning customer. Do more than promote products that sell repeatedly. Be one-of-a-kind with a unique image, specialized marketing, and personalized products. Also, a niche is not always about product, style of service or store merchandising, but catering to a certain type of customer like a contractor, manufacturer, or someone with a unique hobby.

Promote:

  • “Selling loss leaders” is a strategy of promoting a product below its market value. When combined with a secondary product (the leader) a substantial profit can be actualized. In the fast-food industry this is the five-dollar bag of hamburgers with drink and fries’ deal. While the hamburgers are the loss, the fries and drink are highly profitable counterparts of the transaction that make it worthwhile. Promote however you like; with buy two, get the third half price, or buy one, get a baby rattlesnake free…Well, maybe don’t give away baby rattlesnakes. 😉 We are certain you have heard about many good profit-generating promotions. Use them to make a profit overall.

Reward:

  • People love to be rewarded and if they find value in it, they will continue to come back. Use loyalty cards with discounts or offer cash back rewards when possible. Frequent buyers’ clubs and tier systems where higher discounts are offered when certain dollar amounts are spent, are other good ways to drive loyalty and retain customers.

 

What advantage does small business have over national retailers?

Of the many advantages small businesses have over national retailers: being a local figure in the community with a name and a face is paramount. Remember, you are more connected with people in your community than you may realize. This is a useful tool for marketing, developing new customers, and growing support.

  • As a small business owner, you know how to best serve your community.
  • Small businesses are the backbone of not just local communities but of the twenty-eight-plus million companies in the U.S., 7% of them are small businesses.
  • Small businesses can make adjustments that larger companies often cannot. Like sourcing locations where rents may be less, shorter leases and less construction costs.
  • The ability to “stay lean” allows for higher profit potential with less overhead.
  • The flexibility to change relatively fast and move with market trends is better realized when you are not heavily invested into stocked items that may be a passing fad. More importantly, creating the next trend is what every big box retailer seeks. Trends are typically discovered by clever, entrepreneurial small business owners.

 

How can I use “Shop Local” to my advantage?

 Think about the last time you met the CEO or one of the owners of Walmart, Costco or Sam’s. Possibly while fishing you hit one of their yachts or spilled their wine at that fancy restaurant you save months to visit? We didn’t think so. It is rare to meet them, let alone discover what they are truly like as businesspeople or individuals.

As a small business owner, you are empowered to be the local celebrity that everyone feels glad to have met. You are more relatable than what’s his or her name…You know, the CEO of that big box store? Shopping locally is about caring for people in your community.

Build that sling and find that perfect stone to build your business upon. However, instead of trying to bring down a giant retailer, become like the oyster and polish your small business until you develop a valuable pearl.

 

For additional information on surviving national retailers like Walmart, Sams Club and Costco, or on developing retail strategies to help you succeed, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

How to Grow Global Sales in 2022

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If your business has products or a service that can be marketed and sold beyond the boundaries of the U.S., then expansion into developing international markets may bring the possibility of new growth and profits for your company.

Gary is a gym shark living in a small-town in the USA. Nearly every day you can find him lifting weights, sprinting laps in the pool or joining in a yoga class, notably the same days when Sheila the other gym shark works out. He wasn’t always this energetic though. One day he invented an energy food bar with a secret ingredient and soon his workouts looked like a wild hare bouncing around on spring coils. Everyone in his local community wanted that kind of energy. So, he registered his secret recipe and began selling his bars. The business grew into a nationwide sensation. With interest from developing markets in other countries, it was time to consider going global.

 

What are global sales?

Global sales are transactions that take place outside the country in the international marketplace.

Depending upon demand, if Gary were to successfully begin selling his energy bars in Europe, Asia or Australia, his global expansion would be realized.

 

Why would I be interested in growing my sales world-wide?

World-wide growth can potentially generate new avenues for sales and profits.

Online sales for example, customers spent nearly $4.9 trillion dollars in 2020, up from $3.46 trillion from the year before.

There are various ways a business can grow into a global company. Depending on the size and customer fulfillment volume, business should consider the following:

  • Online orders from the company’s home base. This would require logistics for international shipments for either single parcel or bulk shipping.
  • Exporting and Licensing. Exporting allows a business to establish their brands and products in foreign markets with little or no direct investment in each country. A service-oriented business may find this option more challenging unless the services they perform are over the internet. Licensing allows a foreign company to sell and market your brand in their country.
    • This may require creating strategic partnerships, a wholly owned subsidiary or multi-national expansion where the product is produced and distributed from another country.
  • Source a hybrid marketplace such as an Amazon, Costco or Walmart that sell their own inventory and offer a platform through which other retailers can sell their products in other countries.

 

How can I manage costs if I’m shipping globally?

For Gary to ship his gym shark bars the best option appears to be direct to customer via a global carrier like FedEx, UPS, or DHL. However, after striking fame and employing half the small town, the company has expanded into sports equipment, clothing and a special yoga mat designed by Sheila. His shipping needs have changed. A few options to consider are:

  • Air freight:
    • Expedited or next day out freight will likely have the highest premiums. For shark bars with an expiration date this may make sense.
    • Consolidated where cargo is grouped together with other manufactured products and shipped when the container is full. This is a slower and more cost-effective method better for bulk orders shipped to fulfillment centers or distributors.
    • Deferred or low priority shipments that are placed on planes when space becomes available. This is best for non-time sensitive shipments and may be the least costly.
  • Ocean shipping:
    • Containers shipped across sea are 20-40 feet and usually charged a flat rate. While cost effective, shipping time can be slowed greatly and there are risks with reliability such as weather and rough seas.
    • Recent side-effects of the pandemic have brought shipping containers to a complete standstill, waiting to be offloaded. Make sure you know if your container will take months to arrive at its intended destination.

 

What regulations should I be aware of with global sales?

Each country has differing regulations, taxes, and compliance issues to consider. They are constantly changing. The following are a few ways to plans for global sales and regulations:

  • Hire or consult an experienced compliance-centered broker to help with bonds, duties, international freight filings and other complex processing.
  • Employ experienced and well-trained staff.
  • Prioritize documentation to avoid costly delays.
  • Understand compliance fines. Many of these are due to improper valuation, classification, and misunderstanding of trade agreements.

 

Keeping my “US base” happy while expanding world-wide:

To lose core customers by overextending the company into the global market and slowing customer fulfillment at home can be catastrophic. Always remember to grow at a pace the business can handle. Even with a financial backer, all the money in the world will not keep a business alive without consumer spending. Some things to implement include:

  • Hire when necessary.
  • Prioritize key sales regions that generate the highest profit.
  • Head off any foreseeable issues. Many times, a call ahead of an issue will salvage an otherwise lost relationship.
  • Prepare to deal with the emotional side of customers.
  • Use customer feedback to shape future problem solving.

 

Need more information? Paris SBDC can give you ideas and expert advice on how to grow your sales globally. Let us help you understand how and when to expand your business and “Go Global.” Contact Paris SBDC today!

 

For additional information on going global while keeping your at-home customers happy, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.