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Exporting Basics

Costs of exporting can be kept low, but can't be avoided altogether. If you're just starting, you'll face the usual start-up costs for an office, furniture, equipment, and supplies. As a beginning exporter, you'll incur some initial research costs to identify your best markets. To enter and develop these markets, you'll have costs to gain exposure, set up sales and distribution networks, and attract customers. As your exports increase, you might translate your sales literature, take overseas business trips, do more media advertising, and participate in trade shows abroad. In some countries, you may have to redesign or modify your product to meet local requirements or customer preferences.

Generally, the more you spend to prepare, promote, and adapt for export, the greater the return for your business. But don't be deterred if your funds are limited. You can start even on a limited budget. You can also borrow at reasonable rates to help with higher export start-up and operating expenses. Sources include home-equity loans, loans from family, and government guaranteed export loans (e.g., Export Working Capital Loans guaranteed by the U.S. Small Business Administration.

If you already have a production site, you're probably already equipped to export. If not, you'll need to set up space for an office and production facility. Look particularly for opportunities for leased space in enterprise zones or industrial parks that may offer location incentives. If you’re an intermediary (e.g. Export Management Company),you’ll need an office, either in your home or in leased space. Check with a realtor on costs for renting office space and an accountant on home-office tax deductions. If you're home-based, consider a mailing address that sounds more professional, such as a P.O. Box or a suite number in executive premises with mail drop and conference room services.

You may not need additional personnel if you're an intermediary. One experienced person can handle the work for several exporter clients, gathering market research, seeking overseas customers, responding to inquiries, preparing export paperwork, and arranging for delivery of the goods. You'll need a back-up employee in case you're sick, on vacation, or traveling.

If you're already producing a product or service, you can export through an EMC or Export Trading Company (ETC) without adding or training company staff. EMCs/ETCs already have relationships abroad and will incur some or all of the initial costs to find you customers and generate orders. You pay when and if any business results, usually in the form of a commission based on a percentage of the sale. Some EMCs and most ETCs also buy goods outright from domestic producers for eventual resale abroad. You, as the supplier, would get paid right away and would also benefit from exposure of your product abroad. See Appendix D8 for a sample Export Management Agreement.

If you intend to handle some or all of the export work in-house, you should hire an export manager or train someone on staff. The training should focus on market research and analysis techniques, market entry planning, market development and promotion, export financing, export shipping, and handling of export inquiries, orders and documentation. This export guide can be used for staff training, along with other Internet export guides. You can also get training of this kind from and export courses and workshops, as well as on-the-job.

You'll need the usual desks, chairs, filing cabinets, telephone, and office supplies, including letterhead stationery and writing materials. A computer, printer, fax machine and business software are also essential. Recommended are a copier, a scanner with optical character read (OCR) capability, and a scale for weighing overseas-bound mail. For a home office, your telephone should be for business only, not the family phone.You'll need a new line installed for that.

Your computer – a PC or laptop --should have the most powerful chip and memory (RAM and hard drive) you can afford, along with a high-speed modem and compact disk (CD) reader. Your fax machine should be separate from the computer, not just built in, so you can send handwritten and printed materials. Although your fax can double as a copier for very small jobs, it’s best to have a copier that can make and collate multiple copies quickly. An OCR scanner can "read" any clean printed text or picture and enter directly into your computer as ordinary word processing documents or image files. This can save you hours of data entry time.

Your software should include an Internet browser, E-mail, and word processing, spreadsheet, database and slide show capability. You'll need these for market research, correspondence, statistical and financial analysis, client tracking, and promotional presentations.

A successful exporter constantly communicates -- by e-mail, regular mail, phone and fax. To save postage on large direct mailings, get a bulk-rate permit, and format your mail labels to meet postal requirementsfor the lowest rates. Your local post office has details. To save on phone/fax costs, try a discount long-distance carrier. E-mail is an inexpensive way to communicate worldwide, although only to addressees equipped to receive your messages.

The Internet is a great source for much of the information you'll need for market research and planning. The most useful information can be found at little or no cost, including the latest U.S. and international trade statistics; detailed country commercial guides; in-depth industry and country market surveys; and specific overseas trade opportunities and business contacts. The best Internet sources, such as the CITD's Trade Information Database, TradeCompass, and the Commerce Department's BuyUSA and STAT-USA, have aggregated much of this information for easy on-line access.

If you’re a new or infrequent exporter, you’re probably not known outside your country. You’ll need to promote yourself to get overseas exposure and attract inquiries and orders. A company Web site, with company highlights and product descriptions, can be your first window to the world. A web designer can create an attractive site for you, or you can do it yourself with inexpensive Web design software. You can register your dot.com domain for a small fee. Because your individual site may be difficult to find on the very crowded Web, you should also list your company in one or more Internet export directories such as the CITD's Trade Directory. The UN Trade Point network has an Electronic Trade Opportunity (ETO) system for posting specific “sell” offers.

In addition to a Web site and directory listings, you should also have print materials for mailings, handouts and responses to inquiries, such as a company brochure, product sheets, etc. Your brochure could be self-prepared or professionally designed by a marketing firm. Whenever possible, place free press releases in industry journals with international circulation. Higher cost options include paid telemarketing, media ads, and participation in overseas trade shows.