OptimalShip's Helpful Shipping Tips

Small Business Exporting: The Why and The How

Posted by K. Sterrett on Nov 23, 2021 1:59:00 PM

Your complete guide to exporting for your small business

What is Small Business Exporting?

Whether you run your own Etsy shop or have a brick-and-mortar store, you're a small business owner. As a small business owner, have you considered shipping your goods out to foreign markets? You've already done so if you have international customers. Have you ever sent a package to another country? Then you've participated in small business exporting.

Small businesses that take part in export sales grow. They grow more than small businesses that keep everything local. That's because the United States only comprises four percent of the world's population. That means that 96% of the world doesn't have access to what you sell.

Small business owners help boost U.S. trade when they take part in international trade. You also lower your own risk of going out of business from lack of sales. And reaching a wider audience increases your potential for more business. Cha-ching!

So, are you considering exporting your goods to other countries? Not sure what rules there are? Not sure how to get started? Look no further. OptimalShip has put together the ultimate guide for small business exporting. Keep reading to learn all about exporting your goods in international markets.

 

Getting Started

Do you want to take advantage of the benefits of small business exporting? Then you'll need to learn how to properly participate in international trade. Small business owners must carefully follow all laws and regulations. This includes domestic and international laws. 

The U.S. Business and Export Regulations is a good starting place. These regulations come from the International Trade Administration. ITA regulates trade and trade agreements around the world.

Next, the U.S. Department of Commerce's Bureau of Industry and Security will help you. Through BIS, you'll know if you need an export license. Some goods need an export license, but others don't. The only way to know is to look.

OptimalShip is also here to help you. We work with small and medium sized businesses that export goods daily. Contact us if you have questions or need help. We'll be happy to assist you.

 

Where can I export my goods?

So, you might ask, where can I send my goods? Are there any limitations to U.S. small business exporting? Are any foreign countries off limits?

Where you ship does matter. Some countries won't allow their citizens to receive goods from foreign countries. They want to boost their local economy. And other countries are so remote that the shipping and export costs outweigh profit.

But some countries are perfect for overseas trade. Shipping and export costs are reasonable. And packages get through customs in a timely manner. It's easier to keep your international customer base happy this way!

The U.S. Census Bureau provides small businesses with the Global Market Finder. Using this tool, you can see the best markets where you can make your goods available. Then, visit the Country Commercial Guides tool from the International Trade Administration.

Again, if you need any help with any of these steps, don't hesitate to contact OptimalShip. We're here to help you!

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Countries with Free Trade Agreements

Free trade agreements make international shipping easier for small business owners. A free trade agreement means that two countries form a free-trade area. There are fewer restrictions. Free trade also comes with preferential treatment for duties and tariffs. Just be mindful of dangerous and hazardous goods.

The following countries currently participate in free trade agreements with the United States:

  • Australia
  • Bahrain
  • Canada
  • Chile
  • Colombia
  • Costa Rica
  • Dominican Republic
  • El Salvador
  • Guatemala
  • Honduras
  • Israel
  • Jordan
  • Korea
  • Mexico
  • Morocco
  • Nicaragua
  • Oman
  • Panama
  • Peru
  • Singapore

Nearly half of all small business exports go to Mexico, Canada, the United Kingdom, and Japan. Now, these aren't the only countries where you can ship goods. 

 

How Can I Reach Foreign Customers?

Your small business might be ready to reach new customers now. But do you have foreign buyers to reach? If not, how can you get business from foreign buyers? There are several ways to reach an international audience.

  • Use websites to reach a wider audience and grow your international sales. Etsy, Poshmark, eBay, and Amazon are popular examples.
  • The U.S. Export Assistance Center can help you find an online audience. The U.S. Commercial Service can also help. They're part of the International Trade Administration, so they're reliable resources.
  • The State Trade Expansion Program (STEP) helps businesses export their goods. The program helps small businesses create user-friendly websites and market to foreign audiences. STEP also helps small businesses find foreign trade shows.

Using these tools will help you grow your small business in the right market for the right audience.

 

How Does Export Financing Work?

Export financing means that your bank sends you funds to cover your export costs. This is known as a deferred payment. To be approved for export financing, you'll need to work with an export-import bank.

Export-import banks work with international countries and domestic small businesses. Import financing means that the bank pays the importer's costs. The importer ultimately repays the bank with principal interest.

Many banks participate in trade finance in global markets. They are specific about who they will approve. Export financing helps SME exporters accomplish more in less time. But these banks aren't your only option.

The Small Business Administration has export loans programs to which you can apply. This is another option to break down trade barriers for small business exporting. You can contact the SBA's office if you need more assistance. 

 

Other Things to Consider

There are lots of tools to get you started with the day to day operations of small business exporting. But what about the risks? OptimalShip wants you to be aware of the risks. Knowledge is power. But don't let the risks outweigh the benefits, either. We want to see you grow your small business!

These are the most common risks that small businesses face.

There are cultural differences and language barriers. A translator can help you communicate with your customers. Digital tools like Google Translate can also help. Communications challenges can make or break small business exporting. So, this is super important.

Like we said, many banks provide export help. But they're very picky about whom they approve. For this reason, working with the Small Business Administration can be more helpful.

Small business exporting can get expensive. It can be difficult to estimate costs. So, especially at first, you might lose some profit.

Problems can arise with global freight networks. This will cause shipping and customs delays. This part is out of your control, but not every customs understands that. It can result in lost business.

There are a lot of laws surrounding small business exporting. At times, you might need to work with a United States Trade Representative. They can help ensure that you're adhering to all guidelines. Federal agencies have guidelines that must be followed. There might be other federal agencies that get involved. Not every agency has a local office where you can go for help.

The federal government can be tricky. You won't always get approved for the right federal programs. Market conditions are constantly changing. Trade policy must be adhered to. There might be customs issues. And the digital tools that are supposed to make your life easier don't always work.

The global market is constantly changing. You'll need to stay on top of things. We recommend frequently checking the Department of Commerce website. Their website will update you on anything affecting business export.

 

How Does International Shipping Work?

You have multiple options when it comes to shipping your goods internationally. But not all options are created equally. You'll want to choose the most affordable option.  That way, your customers pay the lowest possible shipping rates.

Here at OptimalShip, we work with DHL. Our agreement with them allows us to offer highly discounted rates to our customers. The more you ship, the more money you save. You can also use shipping services like USPS or FedEx. But they won't provide you with the same discounted rates. Either you or your customers will have to pay more for shipping. And who wants that?

To get started with our discounted rates, visit our website or call us at 972.383.9901.  When you call, you won't wait on hold. A live agent will answer the phone and quickly assist you. Here at OptimalShip, we want to make small business exporting as easy as possible.

 

How Can I Be Competitive?

To be competitive, you'll need to stay on top of global trends and tailor your goods and services to those trends. Small companies sometimes struggle to know how to be competitive so they can stay in the game. Here are some tips to get your feet in the game - and keep it there.

  • Digital tools help more than anything else. After all, the internet is how most international customers find small businesses.
  • You can offer finance and payment collection. Options like Afterpay allow customers to make a purchase without paying in full. They pay in installments until they've paid in full.
  • Provide access for your customers. Allow them to view receipts, past orders, transaction history, etc., all online. This will help streamline your small business. It will make it easier for international customers to enjoy shopping on your website.
  • Pay attention as new markets open. Be the first to offer your goods and services.

 

If you need export assistance, please don't hesitate to reach out to us. OptimalShip helps non-exporting companies learn how to export. We help our clients with small business exporting every single day.

Working with us is fast and easy. You won't wait on hold or listen to annoying, pre-recorded messages. You know, the ones that repeat the same stuff over and over again. A live agent will answer the phone and help you. You'll be set in no time.

We look forward to working with you!

 

Frequently Asked Questions

What is small business exporting?

Small business exporting refers to businesses that ship to international customers. Not all small businesses export. Some only offer their goods to domestic customers.

What is the Small Business Administration?

The U.S. Small Business Administration is a government agency. The SBA is there to assist entrepreneurs and small businesses. According to their official website, SBA works to "ignite change and spark action." They want small businesses to "grow, expand, or recover." SBA accomplishes this mission through several means. These include funding programs, federal contracting, and local assistance.

What is the State Trade Expansion Program?

STEP is one of the programs that SBA administers. STEP includes "financial awards to state and territory governments." They "assist small businesses with export development."

STEP works with both small businesses and state entities. Small businesses learn how to export and engage in foreign trade missions. They also learn to successfully market their brands. State entities receive financial awards to aid small businesses in their jurisdiction.

What is the International Trade Administration?

ITA is a bureau/office of the U.S. Department of Commerce. ITA's mission is "to create prosperity." They seek to do this by:

  • Strengthening the international competitiveness of U.S. industry
  • Promoting trade and investment, and
  • Ensuring fair trade and compliance with trade laws and agreements.

 

ITA helps with small business export solutions and trade data and analysis. ITA helps U.S. small enterprisers:

  • research foreign markets,
  • comply with regulations, and
  • resolve trade problems.

 

ITA helps international businesses buy from and invest in the United States.

What is the Department of Commerce?

The  Department of Commerce is an executive department of the U.S. government. The Department of Commerce's primary concern is growing the economy. They use data to make decisions that will do just that.

The Department of Commerce also seeks to promote leaders within the country. They care about creating more jobs. They want to improve the economy and national security and see that all U.S. laws are kept.

What is an export-import bank?

An export-import bank is a bank that works with businesses to help them export their goods. Some small businesses want to export but lack the funds to do so. An export-import bank assists by funding the exports for the SME exporter. The SME then pays the bank back with interest.

Export-import banks also work with international companies. These companies want to import their goods into the U.S. The process is similar. The international company pays the bank back with interest.

What is working capital financing / working capital loan?

Small businesses often work with banks to receive loans so that they can run their business. These loans are used for daily expenses. They aren't meant to cover long-term assets or investments. These loans often help companies with their operating costs when business is slow.

There's a downside to these loans. For the small business owner, their personal credit is used for the loan. Many individuals who start a business create a limited liability company, or LLC. This prevents them from risking their own personal finances.

But these loans are awarded to the individual business owner. Sometimes business gets tough and monthly payments can't be made. Missing even one month can negatively impact the small business owner's personal credit.

What is the world's purchasing power?

This refers to how much a currency is worth for the goods and services being purchased. It specifically refers to how much one unit of money can purchase. Why does purchasing power matter? Because it affects inflation, which in turn affects how much can be purchased.

What is U.S. trade?

U.S. trade refers to trades that relate to the United States. The United States is the world's largest importing and exporting country. The U.S. participates in trade all over the world.

What is an SME exporter?

SME is an abbreviation for small and medium sized enterprises or business exporters. These are businesses/companies that ship internationally.

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