USA EXPORT BLOG

In tough economic times, one of the ways that may seem economical to export your products to Europe is to go it alone without a USA export master distributor, start in the UK, and work your way out from there.  It’s a tempting argument; it seems like since the language barrier is small and it’s on a separate island, this would provide the best entry to Europe.

USA Export: US Dollar Compared to British Pound

However, things are not always as they seem, and this argument has fatal flaws.  Speaking the same language doesn’t mean conducting business the same way.  First, as different as it is to do business in two regions of the US, it is far less than the difference in doing business in the UK.  Second, as seen in the 8 year chart, there is far less play in terms of price advantage between the Pound Sterling and the US Dollar.  This is absolutely critical, as your products have become far more expensive there than they were just two, three, or five years ago.  Lastly, economic conditions are tied closer together between the US and the UK than between the US and the European Union.   Simply put, the reason you export is to diversify; selecting a UK-only strategy minimizes your portfolio diversity, yet exposes you to the same level of market entry risk.

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Many people involved in USA export have read Thomas Friedman’s book, “The World is Flat.”  Before the world became “flat” in the USA, it was already flat in Europe.  Fifty years ago, European manufacturers were already looking to get their wares produced in Portugal, Greece, North Africa and Turkey.  They discovered that in order to compete in the international market, it was becoming necessary to use cheaper labor.  Then, they found they could generally export their products as well. So they started learning about cultures, languages, customs and business differences.

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If your USA export goal is to eventually penetrate the European market, I suggest you start with the 5 largest markets in Europe:

• United Kingdom
• Germany
• Italy
• Spain
• France

Far too many international business neophytes think their exporting efforts to Europe will begin in the United Kingdom and automatically flow onto the continent. But, Europe is not one big market. Hoping that your UK business will lead you onto the European continent is a mistake. Europe is a fragmented market, separated not only by borders into countries, but also by regions within those countries.

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Your USA export product requires initial market research to get off to a profitable start. It’s very important to find out as much as possible about the market(s) you intend to enter, because you want to make sure your time and effort to export your product provides you with the quickest return on your investment. In the US, almost all the information you need is available online.  In fact, the US Government provides a wealth of information through the Census bureau, US Department of Agriculture and so many other sources.

Unfortunately, the international markets do not provide as much information as in the US.  And when they do, not everything is available in English.  The US Government provides information on USA export markets at:

https://www.cia.gov/library/publications/the-world-factbook/
http://www.export.gov/
http://www.foreign-trade.com/
http://www.worldmapper.org/

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If you’re involved in USA export, you know it’s easier to obtain new business from your existing distributors than to develop new customers.

Once your opportunities with existing customers have been exhausted, you should focus your expansion on creating new customers in the geographical market where your company is physically located.  You can make the task of creating new business easier, and limit your travel expenses by starting close to your home office and gradually expanding the radius of your prospecting.  It’s not too difficult to manage this process  in your domestic market.  But, everything changes when you start looking at taking USA export products into international markets.

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Now that you’ve committed to exporting your products, let’s look at the financial resources USA export will require from your organization.  Consider these things when you establish a budget for your international sales department.

Start with additional salaries. If you don’t have the time or the desire to do the job successfully by yourself, you need to hire an expert. How much does an international expert cost?  Is $100,000 a year too much or not enough?   http://www.salary.com lists the salary for an International Sales Manager to be between $79,000 and $106,000 per year, or between $6600 and $8850 per month.

Next, establish a USA export plan for the timing to enter the foreign market.  It easily takes 6 times as long to sell a product overseas than it is in the USA.  If your sales cycle is now 45 days, it will most likely take 270 days or nine months to start seeing orders.  So, before you actually start selling anything, you will have paid your International Sales Manager $6,600 x 9 months = $59,400 just in salary.

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Do you plan to increase your company’s sales by exporting your products?

Before you commit to exporting, consider several key factors to make your USA export strategy more successful.

First, do you have enough financial and human resources to support your exporting effort? Exporting can become a burden on a company unprepared for the extra work. Will you handle the responsibility yourself, or hire an expert to do the job? If you hire an international sales manager, this person’s salary combined with the travel expenses to reach foreign destinations, will immediately reduce your company’s financial resources.

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