'Accidental' Exporters

Ed Marsh | Apr 27, 2011

I know...every company is global. With an eBay account and PayPal even the person spending a couple lonely hours each evening in the spare bedroom is a global business person. But seriously.......

The Germans are serious global business people. The world's second largest exporter, Germany accounts for 75% of total EU exports and, with a population only 6% that of China, exports 89% the total amount. And it does all this with relatively limited natural resources. Those exports aren't mined or grown, generally, but rather manufactured.

So how does a country with 25% the population and 4% of the land mass of the US export 105% of the US? It's really all in the mindset. Of course there are many infrastructural elements readily available (freight forwarders and logistics providers catering to every region, industry and company type; bankers well versed in L/Cs and FX, etc.) which lower barriers. Yet those are available in the US too - with just a little research.

Simply put for a German small business person it feels natural to look for foreign markets. Sure there are pitfalls, complications and potential hassles. But those are part of business in any market, not a reason to avoid the other 96% of the world market (by GDP.)

Yet how many American companies view their markets that way? The domestic market (obviously depending on the product sold it will vary) by GDP is only 21% of the global market. The other 79% beckons.

Yet despite many resources at their disposal, many American companies are "accidental" exporters. Typically American companies have some modest export business. They may have a rep or distributor (or a few) who in most cases have approached them withopportunisticorders, over the internet or at trade shows. They typically handle all their transactions in USD only, and often have remained intentionally ignorant of many of the nuances of IncoTerms, finance, FX, etc. This export business has developed by chance - not according to plan.

But it shouldn't, and needn't, be this way. The tremendous benefits of exporting (growth, diversification, possibly sourcing and innovation) are generally not realized with an ad hoc approach. A proper export program which supports the corporate goals must be carefully designed in concert with strategy, and then rigorously executed with deliberate, ongoing and proactive efforts. Care must be taken to focus on potential and vet any plan for misleading, false assumptions.

No doubt that managing these challenges (many of which are not well understood) is often too much to dump on the plate of an executive already overburdened with domestic, administrative and operational issues.

That's why companies need to bring the talent in to develop, lead, manage and execute such a program. Call me to learn more and learn about our services for "Accidental Exporters."