Foreign nations may provide potentially lucrative markets for the product offerings of small U.S. companies, but only 5% of U.S. small businesses are currently exporting goods and services.1Some owners are reluctant to enter foreign markets due to language barriers, paperwork demands, customs requirements, and expensive tariffs, among other worries.
About two-thirds of small businesses that don’t currently export would like to sell overseas, but many admit that their biggest obstacle is a lack of knowledge. The confusion is understandable considering that more than 20 federal agencies play a role in some part of the export process.2 Fortunately, the federal government is trying to make it easier for U.S. businesses to take advantage of export opportunities.
Thanks to the North American Free Trade Agreement, some businesses don’t have to go far to find a new customer base — about 25% of small-business exports are shipped to Canada or Mexico.3
Recent trade pacts remove tariffs and may help ease access to new markets, including South Korea, Colombia, and Panama. The United States currently has free-trade agreements with 20 nations, and negotiations are under way for wide-reaching Asia-Pacific and European Union trade deals.4
In February 2014, President Obama issued an executive order to establish a comprehensive International Trade Data System. The one-stop web portal is expected to help simplify and speed up approvals for shipments of U.S.-made products when it comes on line in late 2016.5 The federal government also offers financing, insurance, and grant programs to help business owners carry out export operations and manage the risks.
Where to Begin
U.S. businesses can research specific foreign markets or learn about exporting in general at a new government website (Export.gov). Free in-person counseling services are available at Export Assistance Centers located in major metropolitan areas throughout the nation. The centers are staffed with professionals from the U.S. Small Business Administration, the U.S. Department of Commerce, the U.S. Export-Import Bank, and other agencies to help business owners locate opportunities overseas and obtain export financing.
Adding foreign sales to your ledger may help your company grow, diversify your revenue streams, and provide some protection when the domestic economy suffers. Conducting business in an unfamiliar regulatory environment can be tricky, however, and it often takes several years to become export-ready.
1) CNNMoney, January 24, 2014
2) Bloomberg Businessweek, August 16, 2013
3) Associated Press, March 26, 2014
4) Export.gov, 2014
5) The White House, February 19, 2014
The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2015 Emerald Connect, LLC