Expert Offers Basic Rules For Marketing Beyond US Borders From the beginning, small businesses should look internationally. Over the past decade, institutions as diverse as the post office, Small Business Administration, Staples, and Wal*Mart have demonstrated a keen desire to see small businesses look beyond national borders. Walk into most post offices and there is a poster urging businesses to think globally. Wal*Mart is urging its suppliers to look outside the US for resources. The SBA has many programs designed to help small businesses. Staples has complete kits to help small businesses export and import. To be successful, requires many added skills and techniques. Dan Ross, an internationally known consultant to small businesses offers the following six general principals for doing business outside the US. Ross says the first point was advice given to him prior to his first trip overseas in 1978 by the Chief Financial Officer of a Fortune 500 company. Although now deceased, this executive had thirty years business experience and Ross believes this first point is extremely crucial to being successful overseas. The next five he has found to be very helpful in his varied and successful international business career. 1. Don’t assume that anyone who speaks English is smart and that anyone who doesn’t is stupid. Even when someone speaks English well and even in native English speaking countries, there is always room for misunderstandings. Repeat conclusions and agreements and write them down in memoranda of understanding. 2. International business is still much more about relationships and whom you know. When looking for prospective business partners (distributors, licensees, joint venture partners and employees) always look for know- who as well as know-how. 3. Don’t be mislead by big numbers -- China and India have over 1 billion people each; only a small portion is “middle class”, even by developing country standards. Brazil has approximately 150 million people. Less than half are in the “money” economy. These countries also have hugely complex regulatory, legal, financial and structural issues; their laws and regulations sometimes change daily and are always subject to “interpretation”. Japan is the world’s second largest economy; it is also the most difficult country in the world to make money, even for the Japanese. Those mountains of regulations are not there to protect investors; they are there to keep foreign influences out. 4. Americans are not nearly as disliked as our media would have you believe; leave the chip on your shoulder at home, treat people courteously and you will be treated similarly for the most part. Nevertheless, be careful of what you say and do, life can be a lot cheaper outside the US. –2– July 29, 2012 5. When you make your agreements, by all means make them subject to U.S. law; just realize that in order to collect damages or enforce action or cessation of action you will need to do that in local courts, too. 6. Before you visit a country or meet a foreign national, find out as much as you can about their country, history and culture. This knowledge will certainly help you understand doing business there, it will impress your hosts and foreign colleagues and set you aside from other business people. Over the years, Ross has distilled his suggestions into some very basic rules about venturing overseas. He cautions however that a business manager should focus on cash flow rather than an accountant’s view of profit and loss. This is more true with international business than any where else, he adds. Ross offers the following six things small companies should consider as they start up operations. He believes these are only the very basics a business needs at the start of any overseas venture. Ross adds that part of the excitement and interest in International business is that every day you can learn something new, even after many, many years.. 1. Small and start up ventures should always check trademarks in the European Union, Canada, Mexico and Japan before registering the mark in the US or investing money in it. The time to register trademarks in these countries is the same time you register them in the U.S.A. Before you ship products bearing your trademark to any country, initiate the registration of that Mark. The only exception to this is small shipments to small countries where the profitability does not allow it. 2. All sales and other transactions should be denominated in US dollars. It is possible to do business in other currencies but exchange exposure is not for small or start-up businesses. 3. Expect to meet people several times face to face before they will become comfortable enough to do business with you. Plan on seeing them in their country from time to time, if for no other reason than to “show the flag”. Business may start more slowly than is typical in the U.S., but once started may be more long lasting. 4. Talk to business development people at the U.S. Department of Commerce. Their overall competency level is quite high and their programs are excellent. Consider being involved in their trade shows and organized trips to key markets. The Small Business Administration offers trade financing guarantees to small businesses as they get started. These are in the form of proportional guarantees of loans by banks. As the –3– July 29, 2012 business gets larger, the Export Import Bank offers trade receivables insurance that will reduce overall risk. 5. Intermediaries and consultants can be excellent help in starting international operations, but be sure they have experience working with small companies. 6. Tax and repatriation issues (remittance of interest, dividends, royalties, return of equity, etc.) can be critical in the profitability of an international operation. Certainly before forming an overseas subsidiary, acquiring a company or signing an agreement for a technical or trademark license, it is important to consult an accountant familiar with such issues in an international context. Dan Ross is President of STN International of Shrewsbury, MA and can be reached at 862 266 1237 or DanRoss@STNInternational.US.
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