With 95% of the world's consumers living outside the United States, exporting presents a huge opportunity for growth for small businesses. The complexity and challenges of exporting, however, can often be enough to discourage small businesses from exploring the benefits of exporting.
In reality, however, technology has made exporting easier than ever. According to a new report from Google and the U.S. Chamber of Commerce, "Growing Small Business Exports: How Technology Strengthens American Trade," small businesses now have access to a wide array of digital tools, including social media, e-commerce platforms and tools like Google Market Finder, that help reach customers overseas. While not all businesses are aware of these technologies that help facilitate exporting, small business exporting is on the rise.
In fact, since 2016, the portion of their revenue generated by exports has increased by 26%. Exporting has been so rewarding for these small businesses that they have increased the number of overseas markets they serve, from an average of seven in 2016 to 10 in 2018, the report finds.
To increase that momentum, the report makes several key recommendations for increasing access to exporting for small businesses. They include:
- Make promotion of small business exports a government-wide endeavor by prioritizing U.S. export promotion resources to support digitally enabled exports.
- Encourage innovators and technology providers to prioritize development and distribution of digital tools that address barriers identified by small business exporters.
- Develop data-driven strategies to understand and overcome exporting barriers faced by small businesses.
Those recommendations, and several others in the report, would help facilitate an increase in small business exports and drive growth for small businesses, like Kettlebell Kings. The Austin, Texas-based company, which carries lines of kettlebells and accessories used by professionals in all major sports, is harnessing the power of exporting by leveraging a wide range of technologies.
Founded by three college friends who saw a market for a business that aimed to build a lifestyle around kettlebell workouts, the company now exports 15% of its overall sales to more than 40 countries.
Kettlebell Kings relies heavily on technology to make it happen. In addition to using social media, including Facebook, LinkedIn, Instagram and Pinterest, and marketing suite Hubspot, it also relies on more than 30 Google products including YouTube and Google Ads.
"Google Ads has been the mainstay of our advertising since we started the business, and the way we enter any new market is with Google Ad campaigns," said Chad Price, founder and managing partner of Kettlebell Kings.
Price estimates 80%-90% of the company's total advertising budget goes towards Google Ads. They also run ads on YouTube. It delivers all of its exercise content and training online, leveraging platforms like YouTube, where their channel has 16,000 subscribers.
"YouTube has been awesome because we can create workouts and video content, which is important because kettlebells are still a relatively new product to consumers," he said.
Kettlebell Kings plans to build upon its digital content and continue to partner with international brands, such as Equinox and Lifetime Fitness.
For companies looking to grow their business through exporting the way Kettlebell Kings has, there's a lot to consider. Here is a breakdown of some of the challenges and resources for businesses hoping to tap into the potential of selling to customers overseas.
Taxes, data localization and privacy rules top the list of concerns for small businesses considering the challenges of export regulation. All healthy concerns, considering the complexity of these matters and the potential for costly -- even crippling -- error.
Businesses considering exporting need to be aware that every country and economic zone (the European Union, for example) has different taxes, information sequestration rules, and regulations regarding what constitutes the establishment of a local branch of a company. Change happens rapidly, at home and abroad, and keeping up with regulations in multiple countries can be daunting for a small business without a staff of export experts.
Fortunately, there are digital tools available to address many of these concerns, and human help for the rest. The International Trade Association (ITA) operates under the auspices of the U.S. Department of Commerce with a stated mission of promoting international trade and ensuring compliance. Available on its website are links to both domestic and international offices, including contact information for local market and logistics experts. In the private sector, sites such as Etsy, PayPal and eBay provide tools and information for small businesses attempting to reach customers overseas.
Difficulty getting paid in a timely manner could dampen any exporter's enthusiasm for foreign markets. Not all buyers will pay in full in advance -- particularly when there is a long transit time or risk of loss or damage. Large exporters have faced these issues forever and have developed mechanisms to address them, including open account terms, letters of credit and consignment arrangements.
One way for small businesses to export while avoiding collection issues is to sell to another U.S. company which then exports the product, and plenty of companies are doing just that. When taken into account, this method -- known as indirect exporting -- increases the contribution of small business to total U.S. exports by almost 50%. Small businesses can also avail themselves of the cross-border payment systems found on sites such as PayPal and Amazon. Information on collection issues is available at Export.gov. Assistance with dispute resolution can be obtained through the International Chamber of Commerce's dispute resolution services, which are available to every business, large or small.
Communication difficulties can be a challenge for small business exporters. Language differences, while certainly a factor, are not the end of their worries. Cultural differences and unfamiliar business practices in foreign markets can also pose challenges.
Truly reaching customers overseas means using the locally accepted form of communication, the proper level of emotion when speaking (or writing) -- and even paying attention to how much information is stated outright, versus being simply implied. In some cultures, it is not just about the words but about the spaces between them.
So, where do businesses get communication help? For the straightforward language question, Google Translate is a solution. The tool provides instant translation across more than 100 languages. For softer communication skills, a web search for business etiquette in almost any given country will turn up tips for understanding the nuances of communication there. By following the links on Trade.gov, businesses can communicate with in-country professionals and view videos about business practices in specific markets.
Tariffs and customs
Tariffs and customs are big news these days and their very existence can appear to be a potential stumbling block for small businesses looking to export. While larger entities often employ entire teams of people to address the varying duties and regulations inherent in international trade, most small businesses don't have that luxury. Staying up on the changing rules can be daunting enough to dissuade a company from entering the export market and companies surveyed listed tariffs, customs and quotas among the biggest barriers to exporting.
Before potential exporters can assess the actual impact of tariffs and customs, they need two pieces of information: the country(s) to which they intend to export, and the classification code for their product. Choices made here will determine the extent to which quotas, tariffs and taxes will impact the viability of an exporter's business plan.
The United States has 14 special trade agreements concerning 20 countries -- the purpose of which is to encourage trade with favored nations. Many small businesses consider their North American neighbors as potential markets. Information on product classifications and attending tariff rates is available at Export.gov and additional resources are available at the Office of International Trade, an arm of the Small Business Association (SBA).
Risk and infrastructure
Issues such as corruption, bribery, political instability and varying foreign exchange rates are worrisome to current and potential exporters. Unpredictable events, such as civil unrest and climate disasters, can wreak havoc on a business's bottom line. Ignoring the potential downside will not benefit small businesses or the overall U.S. economy.
Small businesses can enter a less stable market indirectly -- by selling to or partnering with a company already exporting to it. Alternately, businesses selling directly can mitigate the risks associated with inadequate infrastructure and possible corruption through e-commerce. Fully 50% of small business exporters listed sites such as Etsy, Shopify, eBay and Amazon as extremely important to their success, the report finds. Amazon Global Selling not only ships worldwide but offers tools to help businesses choose the right market.
Logistics -- the nuts and bolts of getting product from point A to point B -- is also a very important challenge small businesses face when exporting. Specifically, the time required to identify and solve transportation issues and the actual cost of transportation are of concern.
Businesses considering exporting and those eyeing new markets need to view both sides of the transaction -- the ways and means of shipping product to a point of departure and what will happen on the other side of the border. How will the product proceed through customs, and where will it be warehoused, if necessary? How will it ultimately be delivered to the paying customer?
Third-party logistics companies (3PLs) offer web-enabled tools to assist with cross-border shipments. Assistance with logistics challenges is also available through Google Market Finder and on the logistics page at Export.gov.
Small business exporters, or those looking to become exporters, most likely already have a product or service. But many struggle to adapt a current product or service to meet the needs and expectations of an offshore market. Products being developed for sales across borders need to be viewed through a foreign lens. In addition to the obvious details of demand and price, the product must be packaged for shipment and labeled for attractiveness and to meet legal requirements in the destination country. There may be a need for after-the-sale service or technical assistance.
Ultimately, exporting products to customers overseas is not as daunting as it seems. The secret to success is finding the right tools and partners to help your business work through the challenges.