By Lorraine Mallinder
businesswithoutborders.com
4 August 2011
By Lorraine Mallinder
Margaret McEntire may have a sweet tooth, but she’s one tough cookie. Back in the late eighties, she started selling bouquets of candy flowers and gourmet chocolates dressed up in colored ribbons. Two decades later, there are 700 franchises of Candy Bouquet in around 40 countries around the globe. Somewhere along the way, this “nice little housewife” from Little Rock turned into a “tough businesswoman who won’t take no for an answer”.
Stories like these inspire. But, while many entrepreneurs might relate to the beginning of the journey and aspire to the end result, it’s the bit in the middle that tends to be daunting. That part, as McEntire tells it, has been filled with all sorts of “bizarre stories”: the Chinese couple who bought a franchise and then pretended it was their own concept (rolling out twenty stores across the Middle Kingdom), the shipments blocked by Saudi customs and – the latest - an Egyptian franchise trying to wire money just as all hell broke loose in Cairo. Incidentally, that payment is still blocked.
It’s enough to make the average small- and medium-sized business blanch in horror. Going global may seem full of insurmountable challenges, not least that of actually getting off the ground, never mind dealing with the imponderables that will surely follow. However, in the wake of the fiercest recession since the 1930s, growth opportunities at home have dwindled. The future for America’s businesses lies elsewhere. In fact, it’s become a matter of national priority, with last year’s launch of the National Export Initiative (NEI), which aims to double exports over the next five years, an increase that may support two million jobs at home. Smaller companies will be the drivers of this growth.
This is all very well, but where do you start? The existing network of public-private assistance, the same one that helped ease Candy Bouquet’s transition to global markets, probably seems as obscure, complex and unintelligible as the Dead Sea Scrolls to the uninitiated. Let’s face it, there are seven government agencies involved in the sphere of international trade (actually, 20 if you count the more obscure agencies on the government’s Trade Promotion Coordinating Committee), not to mention countless programs and state-specific initiatives. “It’s a daunting task for those of us who want to take people by the hand and get them into the market place, as much as they think it’s scary,” concedes Richard Ginsberg, senior international trade specialist with the Office of International Trade, a unit of the US Small Business Administration.
So, where do you go first? The Small Business Administration? The Department of Commerce? The Export-Import Bank? Your local District Export Council? Your state’s Economic Development Agency? A US embassy in your target market? The list could go on and on. Truth told, all or some of these organizations could help you achieve your aims. But, rather than running around like a headless chicken, calling random numbers (enduring never-ending lists of menu options), your answers lie closer to home than you think, at your local Export Assistance Center (EAC).
“We’re the front line,” says William Fanjoy, director of the Virginia and Washington DC EACs. Indeed, EACs, which are part of the US Commercial Service of the US Department of Commerce, are one-stop shops combining the expertise of a host of federal, state and private entities. “Companies call us and we find them the resources wherever they are,” says Fanjoy. Assistance could include areas like market research, packaging requirements and help with pinpointing potential foreign partners. And, it’s not just a helpline. EAC advisors spend as much as 18 months with the average client, assessing their needs, putting them in touch with the right organizations, ensuring they are export-ready and even setting up meetings with pre-vetted potential foreign partners (part of the popular Gold Key Program).
Client queries on an average working day range from the basic to the baffling. One of Fanjoy’s recent clients asked how to comply with the Foreign Corrupt Practices Act, a law covering anti-bribery provisions and accounting requirements. Fanjoy pointed him in the direction of the US Embassy in Germany, where on-the-ground staff from the Commercial Service would be on hand to provide advice. He also suggested the client contact a lawyer specialized in the field through the local District Export Council, a body made up of community business leaders with knowledge of international trade (such organizations are located throughout the US). The case is a prime example of the blend of public and private expertise available through the country’s network of over 100 EACs.
Once Fanjoy has ascertained that a company is “export-ready”, with all necessary research conducted and appropriate access to finance and insurance, he will refer them to commercial staff at a US embassy in their target market. Ann Bacher, an officer at the US Embassy in Mexico City, says: “We’re good at finding matches, finding joint venture partners, at getting companies into the market.” Like many overseas commercial staff, she tends to get asked lots of questions about customs issues and local market regulations, using her contacts in Mexican government ministries to untie knots. It’s not unusual for companies to remain in touch with Commercial Services staff, both in their local EAC and foreign embassies for years.
It is through such relationships that McEntire was able to turn Candy Bouquet into a worldwide venture. The company’s expansion started through the Commercial Service’s Gold Key Program, which helped her sell her first franchises in Eastern Europe. One of her main allies is a trade specialist at the Little Rock EAC, who provides her with information on foreign business practices and has helped her to take advantage of a range of programs. Later, she went on to serve with the Arkansas District Export Council, sharing her expertise with local firms.
Small- and medium-sized businesses across the country are waking up to the wealth of opportunity beyond US borders. But, there are hurdles to overcome, as evidenced in a recent survey conducted by the National Small Business Association, which showed that nearly half of non-exporters do not consider their goods or services to be exportable. “Most barriers to trade are psychological,” says Ginsberg. “Exporting can provide the most incredible opportunities. You’re afraid, but by definition you’re a risk-taker and you go for it because you’re half-crazy anyway!”
Case study one – iWood Eco Design
For Stephen McMenamin, CEO of iWood Eco Design, it all started with a phone call to his local Export Assistance Center in Indianapolis. He was convinced that his designer sunglasses handcrafted from sustainable exotic wood would sell elsewhere, but was unprepared for just how quickly business would take off after that call.
Staff at the center helped him to identify an exclusive fashion trade show in France, working through the US Embassy in Paris to secure McMenamin an invitation. Furthermore, he was able to obtain funding from a local assistance program run by the Indiana Economic Development Corporation. Prior to the big event, commercial staff at the US embassy promoted iWood by calling designers, such as Louis Vuitton and Hermes.
The sunglasses were a hit. As a result of the show, McMenamin struck deals with Les Galeries Lafayette in France and House of Fraser in the UK, both highly prestigious names. “I started getting a tremendous amount of press,” he says. I’d spent a decade invested in the project and all of a sudden I was in Elle and Vogue.”
Back on home ground, he continued his relationship with advisors at the center, who provided advice on European Union tariffs and taxes, market intelligence and distribution. They also helped him identify more new markets. Now, with clients in Australia, Europe and Japan, McMenamin’s tiny company is well and truly an international brand.
“It’s really not as confusing as I once thought,” he says.
Case study two – Two Men and a Truck
The concept of providing manpower and transportation for house moves is hardly novel. Yet, Michigan-based firm Two Men and a Truck managed to sell its franchising concept to the UK and Ireland.
“I think it’s a combination of the name and the level of service we provide,” says COO Matt Cutler. The company with the catchy name places a lot of emphasis on customer service. Satisfaction surveys are carefully analyzed, with complaints swiftly addressed.
In 2001, after a decade-and-a-half in business at home, the firm came into contact with Edwards Global Services, a consultancy specializing in international franchising expansion. The two companies worked through an Export Assistance Center to sell the concept abroad.
The center reached out to commercial staff at the US embassy in Ireland, who placed an ad in an Irish business newspaper for a master licensee. By 2006, Edwards Global Services and Two Men and a Truck had signed a UK-Ireland franchising agreement for more than $300,000.
Useful resources
Trade Information Center helpline ( 1-800-USA-TRAD ) – Funnels callers through to trade specialists at their nearest Export Assistance Center.
www.export.gov - Revamped export portal of the US government offering practical advice and information on trade shows, trade missions and web seminars. Collates useful material from a plethora of US government agencies. www.export.gov/eac/ provides links to Export Assistance Centers across the country.
www.sba.gov/ - The US Small Business Administration can help you find resources and explore programs. Check out the section on SBA-backed loans available through your local bank or credit union.
www.districtexportcouncil.com - Portal with direct links to the country’s 56 local District Export Councils, groups of local business experts with international experience working closely with Export Assistance Centers.
www.exim.gov/smallbusiness/ - The Export-Import Bank of the United States provides financing and insurance that is difficult to secure through private banks.
www.opic.gov/ - The Overseas Private Investment Corporation is an independent government agency, which provides direct loans, loan guarantees and insurance to investment projects in developing countries and emerging markets.
http://www.eda.gov/Resources/StateEconomicDevelopment.xml - Portal of the US Economic Development Administration with links to state and local economic development agencies, which can provide information on local initiatives and funding programs.