Exporting your product overseas literally opens up a whole new world. And it’s not just for mega-corporations: Approximately 70 percent of all U.S. exporters have 20 or fewer employees.1 Here, we share an overview of why exporting could be a sound company move, point out a few potential challenges and share insights on strategic financing.
Why Exporting Might Make Sense
Any company wanting to increase sales, profits and customer base might find an ally in exporting. After all, nearly 96 percent of consumers live outside the U.S., and two-thirds of the world’s purchasing power lies in foreign countries.2
Exporting can also help a company stabilize its sales base. Much like diversifying an investment portfolio, exporting may allow you to diversify your market base. In theory, that means a market downswing in one country could be countered by an upswing in another location.
Depending on the product or service, moving into foreign markets may also even out seasonal fluctuations on the domestic scene — for instance, due to different holidays or simply different climatic zones.
Today’s technology makes the path to international commerce smoother than ever before. From the array of fast, efficient communication options to the relative ease of online commerce, it’s easier for a company to attract, inform and transact with customers anywhere on the globe.
Besides new clients, entering foreign markets could help you develop new and profitable company partnerships — new suppliers or joint ventures, for example. Put it all together, and international trade could give your company a distinct competitive edge.
Why It’s Critical to Do Your Homework
Along with these potential advantages, exporting still has its hurdles. Government policies can be restrictive. Not all products or services translate to an international marketplace. Cultural differences and even seemingly minor language nuances have derailed even large, experienced corporations. So there’s no question that companies need to take time for thorough research and planning before stepping into exporting.
Why Export-Import Financing Can Make a Difference
Many companies don’t entertain the idea of exporting for fear of not getting paid. Those cash flow concerns aren’t helped by the extended payment terms that have become the norm for foreign buyers.
Export-Import Financing can help diminish that risk. For instance, here are some of the services Rabobank offers to give you peace of mind with your international transactions:
- Letters of Credit – Improve your company’s cash flow by using import, export or standby letters of credit.
- Documentary Collection – Reduce the cost of sales and transfers, and speed up trade processing times.
- Foreign Exchange Services – Provide your company with competitive, real-time foreign exchange rates.
- Rabo TradeLink – Convenient online access to serve your trade finance needs.
To learn more about these and more International Trade Services that can help your company take advantage of export opportunities, talk with your Rabobank Relationship Manager, or call (855) ITS-RABO (487-7226).
- Small Business Administration, http://www.sba.gov/content/export-loan-programs; accessed Aug. 17, 2012
- Export.gov, http://export.gov/begin/index.asp; accessed Aug. 17, 2012
The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.