-
-
-
Jim Urbach
Director, International BankingMay 01 2024
-
-
Expanding Your Business to International Markets
Author: James Urbach, Director, Global Banking
Technology and eCommerce have leveled the playing field to allow small and medium-sized businesses (SMBs) to compete against large corporations in the global marketplace. Surveys conducted by the National Small Business Administration reveal that 58% of SMBs have exported goods, while half of the remaining 42% would be interested in selling products abroad. To help businesses of all sizes increase revenues, we created a guide on how to start expanding your business internationally.
Step 1 – Know Your Market
Before taking any concrete action to expand internationally, you need understand if there is sufficient demand to make any expansion worth your while. A few factors you should look into include understanding your target demographic and the culture of the market, and ensuring your product or service is compatible with the market you wish to enter.
Step 2 – Get Educated on Trade Regulations and Compliance
Exporting regulations can be tricky to navigate, so familiarizing yourself with export and customs regulations and government sanctions programs (OFAC, SDN Lists) are a necessity. The U.S. Department of Commerce’s International Trade Administration provides detailed information and useful tools to help you get started through Export.gov. An additional resource is the U.S. Census Bureau Department of Business and Industry. It provides a wide range of information related to foreign trade regulations.
Step 3 – Understand Costs
When selling internationally, you will want to understand the additional costs such as logistics, taxes and duties that occur when exporting. Having a grasp on your products Schedule B or Harmonized System (HS) code will allow you to calculate some country specific costs and taxes.
Step 4 – Financing for Your Exports
As mentioned, exporting can result in additional upfront costs, and when coupled with existing costs, some companies will need additional working capital. That is where U.S. government programs from EXIM Bank, the Small Business Administration and USDA can help support your company’s international growth.
Step 5 – Know How to Get Paid
There are many different payment methods that SMBs can utilize when selling internationally, from the most secure, cash in advance, to the least secure, open account. Other payment options include letters of credit and documentary collections or cash against documents. A bank that works in global trade can help determine the best method for your company.
Step 6 – Understand Foreign Exchange Risk
A major challenge to exporters is the fluctuation of currencies, which can increase or decrease the overall cost of your product or service. Understanding these risks from the buyer and seller perspectives can allow you to devise a hedging strategy to minimize risk.
Step 7 – Using the Right Banking Partner
Your financial institution should be a major partner in taking your business international, and at a minimum it should be SWIFT enabled, have foreign exchange capabilities, be able to issue or receive commercial or standby letters of credit, and provide multi-currency accounts.
Finding the right financial partner can guide your company and connect you with the resources you need to grow revenues through global sales.
FNBO’s global trade experts can help you navigate the international finance scene with confidence. Connect with us today.
About the Author
With more than 25 years of experience, Jim works with corporate clients, financial institutions and technology partners in the Colorado market. He leads the bank’s efforts to build a correspondent network, supporting corporate customers with comprehensive lending solutions. Through valued relationships, he comes to know the business of each customer, using the operational insights gained to provide guidance across the complex world of international business.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.