If you haven’t considered exporting as a way to grow, it may be easier than you think, and there is a lot of potential. According to a Census Bureau report, in 2015 295,000 small and medium-sized businesses in the U.S. traded or exported goods internationally. Why not your log, lumber or wood products business?
So what countries or markets might you do business with? In general, the top five markets for small and medium-sized business are: Mexico, Canada, China, Japan and the United Kingdom. Some of these are much farther away than others, but you shouldn’t rule out markets that are farther away because there is plenty of help for you to get started in any viable market.
You can take a three-step approach to growing your forest products business by exporting. For example, many hardwood sawmills have experienced significant growth by targeting the Asia market, especially China.
The following are some top tips when looking to crack into the export market.
Get Counseling and Education:
Your business can take advantage of free help from a variety of sources. U.S. Export Assistance Centers (USEACs) can provide an orientation on the process of exporting at their centers located across the country. Each center has staff members who are experienced with exporting and helping businesses get started.
The SBA’s office of International Trade can provide assistance with access to international markets as well. This organization publicizes the small business benefits of U.S. trade agreements and works to protect the rights of small businesses under these agreements.
Finding the Buyers:
There are foreign sales opportunities for your pallet, packaging and lumber business. You simply need to take advantage of programs designed to build bridges to new markets. There is a program called the State Trade Expansion Program (STEP) that is designed to help businesses begin exporting. Through STEP you can:
• Find opportunities to participate in foreign trade missions and trade shows
• Access services to support foreign market entry
• Get assistance with developing a website for foreign buyers once you have targeted a foreign market
• Design international marketing campaigns
Your home state likely receives STEP support and funding and you can contact your state commerce office to determine what assistance and funding are available.
You probably won’t be able to go to your local banker and get a loan to finance expanding into foreign markets because they will likely view this as too risky. The SBA has a program called Export Express that enables qualified lenders to underwrite a loan with a 90% guaranty from the SBA on these export loans. The SBA also has the Export Working Capital Program (EWCP) that provides advances up to $5 million to fund export transactions. You can use your EWCP funding to finance supplies, inventory, WIP of your export goods. Simply check with your local lending sources to see if they are approved to underwrite an EWCP loan.
Once you have the appropriate financing in place you have the ability to negotiate and sell products. Just remember that you cannot get EWCP disbursements until you have firm purchase orders from your foreign buyers.
A good place to start your education on growing sales with exporting is http:// www.Export.gov and the SBA Office of International Trade.