Why Export

You did it, you are a small business owner and doing relatively good selling in the United States; after all, we have the world’s biggest economy. Why would one want to consider exporting? Would the benefits outweigh the additional complexities that come with exporting?
Let’s consider some of the benefits of exporting.

1. 1. Higher demand because your products are Made in the USA. Believe it or not, this label still carries a lot of weight and is considered a substantial competitive advantage, especially in the developing world.
   2. Diversification of your markets can help you mitigate the potential negative impacts of consumer behavior changes and economic factors. We are all too familiar with ever-changing trends in American buying habits, so having somewhat independent markets can act as a buffer, giving you extra time and capital to make necessary adjustments.
   3. We all heard about the standard lifecycle of a product. By staggering the launch in different locations, a manufacturer can extend the product life cycle.
   4. An increase in the number of products manufactured and sold can help you achieve the benefits of economies of scale. If you already there, then adding extra capacity and selling more products will generate more profit.
   5. One of the biggest reasons you will see many sources site is that 95% of consumers live outside of the US; why not tap into that vast market.

There are some pitfalls that you can encounter. Nothing that cannot be resolved by spending some extra time educating yourself on-line.

1. 1. It is crucial to understand how the exchange rates can affect product pricing in an export market. Different markets have different exchange rate regimes, so make sure to learn about each market you are going into.
   2. There are potential issues with US Customs and Export restrictions. For the most part, they do not negatively affect US Food manufacturers; double-check with a Customs Agent, though.
   3. Be smart – do not offer bribes to foreign officials, even if people tell you that is the way business is done in that country. Here in the US, you can be prosecuted for such activities under the Foreign Corrupt Practices Act (FCPA).
   4. Avoid potential misunderstandings by studying up on the Incoterms. One of the easiest to use in the beginning is Ex Works (EXW) – meaning the buyer has to pick it up at a specified location that you will designate (usually your warehouse).

There are other benefits and potentials pitfalls that a company might face entering international trade. The most important for anyone who has no experience in it is to educate oneself and take one step at a time. Use common sense – if something smells “fishy,” stay away (unless you are in the seafood industry).