Small businesses trade overseas, with a little help
Until about a year ago, Andrew Berner figured exporting was a game for the big guys, those large US corporations with billions of dollars worth of goods to sell around the world. He did not see his small company, Computer Systems Engineering Inc., of Burlington, Mass., as part of the international trade scene.
"I thought it was crazy for a company our size to go into the complexity of exporting," said Mr. Berner, vice-president of the data collection and computer services firm. With only $1.5 million in sales, he thought Computer Systems could not afford to send marketing, sales, and legal exerts into international competition.
But some time next spring, the company should be selling its products, including computerized equipment to help stores make on-shelf inventory surveys, in Great Britain.
The move into exporting became realistic when Berner made contact with a foreign trade research firm, the World Trade Group, based in Portland, Maine. For fees ranging from $2,000 to $4,000, World Trade can do market research overseas, locate distributors, and prepare US small business executives for sales visits abroad.
The World Trade Group is one a variety of research, marketing, merchandising, and brokerage firms waiting to show the thousands of US small businesses that are not exporting how painless -- and lucrative -- it can be. With the US trying to improve its balance of trade, the potential for small business exporting is seen as a valuable, but almost untapped, resource.
"Small businesses are just scratching the surface" of their potential export market, say James D. Mckevitt of the National Federation of Independent Business , a group that represents over 500,000 small- and medium-sized businesses. "There is a world of opportunity out there -- literally."
Small business operators have not ventured into the international market, Mr. McKevitt says, because of three myths about foreign trade: It is too competitive; it is too hard to get the money; and businessmen do not know where to start or how to preceed with exporting.
He counters these arguments by pointing out that American products can compete with those from any other foreign country; that letters of credit are fairly easy to obtain; and that export assistance and marketing companies can make exporting remarkably simple for the manufacturer.
Small companies may have even fewer excuses not to export if Congress passes the Export Trading Company Act, a bill that would allow formation of export trading companies where US businessess could get one-stop assistance with marketing, financing, transportation, and legal red tape. The bill also tries to clarify US antitrust laws that relate to exporting.
The bill passed the Senate in April on a 93-0 vote. At least two pieces of similar legislation are working their way through House committees.
In addition to the kind of help offered by the World Trade Group, there are a variety of other firms and agencies available to assist small business with exporting.
* The largest of these are export management companies (EMCs). For commissions ranging from about 10 to 20 percent of sales, an EMC provides a wide variety of services, including market research, distribution, financing, advertising, shipping, translation, and documentation. Basically, they leave little for the manufacturer to do except get his product to the dock or airport for shipment overseas. There are about 1,000 EMCs, mostly located near seaports or other major exporting centers.
Most EMCs' specialize in one or two types of products, such as consumer goods , computer products, or machine tools. There are a number of EMC associations that can help a businessmen find one for their needs. These include the Export Managers Association of North Hollywood, Calif; the National Export Company in New York City; and the Overseas Sales and Marketing Association of America, located in Chicago.
* Export brokers operate a little like a real estate broker, receiving a fee only after a sale is generated, usually about 10 percent of the overseas delivery price. Unlike EMCs and export research firms, the broker assumes all up-front marketing costs and does not charge a retainer in advance.
* The cheapest source of export assistance is the US Department of Commerce. For $90 per country, it will produce a survey of the market potential for a particular product and a list of possible contacts, suppliers, or retailers.
An export assistance or marketing firm can spare a small business executive from "spending hours and hours on the telephone," notes Carl Zinnell, president of ZLF International, an export broker located in Waltham, Mass. "We can merchandise your product with somebody we know wants to buy it."
Lately, says Harold J. Frey, vice-president for product development at Drake America Corporation, a New York-based EMC, finding markets for US exportes has been a bit more difficult because of the strength of the dollar, which makes it more costly for foreigners to buy American goods. "Today, we're getting priced out of the market, especially in Europe," Mr. Frey notes.
However, the biggest barrier to exporting small businesses have to overcome, says Andrew Campbell, senior vice-president of the World Trade Group, is probably a cultural one. Mr. Campbell, who is British, says American businessmen are not used to the idea of dealing with cultural and language barriers in order to make a sale.
"Most small companies are uncomfortable taking the initiative in foreign marketing," Mr. Campbell says. "European businessmen get immersed in international trade much earlier." A French businessman is oftenless concerned about exporting to West Germany than an executive from New England is about sending his products to Texas, he notes.
One small firm not awed by the idea of exporting is Irwin Augerbit Company, a Wilmington, Ohio, manufacturer of drill bits and hand tools. With the help of an EMC, says Irvin Branderhoff, executive vice-president, the company has been exporting "for at least 50 years." Today, overseas sales make up about 20 percent of the firm's business.
"There's no mystique to it," Mr. Branderhoff says of exporting. "It's a fairly simple thing."