While it may seem frightening to some, now’s the best time to explore how to expand your businesses’ international presence. While globalization has created opportunities for small businesses to sell their goods and services in new markets, not enough of them are taking advantage of these international opportunities. In fact, according to the U.S. Department of Commerce, less than 1% of small businesses currently sell their products to foreign buyers.
Of course, the COVID-19 pandemic has accelerated the rise of e-commerce and will only continue into this year’s holiday season – with a projected record-breaking number of online shopping sales.
Although international trade represents an attractive growth opportunity for SMEs, many still have concerns about the challenges and barriers surrounding cross-border trade. Let’s look at the top tips on how you can overcome your fears about going global.
Measure your Preparedness to Go Global
To help determine if your business is ready to break into the international marketplace, evaluate if your businesses’ products or services will be competitive in a foreign market. At DHL, we developed a test to determine if your product offerings and your organization’s capabilities are “relevant, appropriable and transferable.” The “RAT Test” aims to assess if audiences in new international markets will find value in your products (relevant); if your goods are unique enough to prevent imitation from competitors in the market you are entering (appropriable—meaning, you don’t want them to be); and if you can sell and deliver without having to spend excessively to reach the end consumer (transferable).
Research Potential Markets and Get to Know Your New Consumers
Whether importing or exporting, one of the first things you should do is research potential markets and become familiar with the regulatory requirements and rules of each market – as these can vary significantly from one country to the next. These laws will not only be governed by geography, but will also be specific to the type of products being shipped. Consider top opportunity markets, such as China and Southeast Asia and Mexico and Canada, that will allow your business to reach international success.
Power-up your Potential
How strong are your online e-commerce operations? Consumers are getting more and more familiar with buying goods from businesses cross-border. Power-up your business’s presence online and offer international shipping and other favorable purchase and return terms. Consider establishing a blog – one that will allow your company to stake out a thought leadership position, and help you connect with new customers. Next, get your social media strategy in order, and ensure that it reflects your audience. Are you customers more Facebook, or TikTok? Social media will not only improve brand awareness and search ranking, but it will also help you learn about your customers and engage with them.
Know the Cost to Expand your Business
Being knowledgeable of all associated and potential costs will help you reach your export goals. Keep up with exchange rates, finance options, shipping and Customs costs that impact your profit margins. The U.S. Department of Commerce’s International Trade Administration (ITA) is a good place to start. The ITA’s Trade Finance Guide is a must-read for existing exporters and potential new exporters, as it offers a helpful overview of many of the private and government-sponsored financing options available for traders.
Understand Cross-Border Trade Paperwork
Correctly prepared shipping documents, proper labeling and compliance with any license requirements are critical to the smooth movement of goods across borders everywhere. Complying with U.S. Customs and Border Protection (CBP) requirements for every shipment can make the difference between speedy satisfaction and difficult delays. Your business will come out ahead when you pay attention to the details, have documentation correctly completed, and know your responsibilities.
Know the Logistics Process
The safe delivery of goods to customers is a priority to keep your business moving. Even before the pandemic abruptly upended shopping behaviors, consumers were increasingly expecting their e-commerce orders to be delivered fast. Now, the rules of global e-commerce have been re-written by COVID-19, and the expectations for speed and always-available express delivery are accelerating by the minute. Across industry sectors, businesses are re-imagining their supply chains and transforming their logistics strategies to prioritize speed. Express logistics experts and shipping providers like DHL have designed new transportation solutions and technology tools to lead the way toward a faster future.
Doing business globally, like any business initiative, comes with its risks and rewards. Compliance should be a top priority for every exporter or businesses seeking to expand into the international marketplace. Cross-border trade brings big opportunities for small businesses, but it also opens the doors to new threats, and makes the pool of data you need to protect even bigger. Meet with your IT team or vendors, and talk to your sales team, your legal counsel, and financial planner to determine your risks and liabilities.
Familiarize Yourself with Important Trade Terms
Confused about exporting jargon? While it might seem intimidating at first, make sure you understand the basic terms of trade to help guide you. By expanding your knowledgeable about key terminology, such as bill of lading, certificate of origin and de minimis, it will ensure you are ready for any international trade deal.
Are you thinking about taking your business international? Let us know on Twitter at @DHLUS.