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With Domestic Economy Slow, Foreign Markets Appealing To Many Small Businesses

As the domestic economy continues to falter, small-business leaders are turning to foreign markets as a way of growing.

Dan Ross, who has helped many companies find markets overseas, believes that done properly, international business is a way for small companies to make additional revenue and add to cash flow that drops to the bottom line.

However, he believes several considerations should be considered before taking a business abroad.

  • Insure the company’s base is secure. Depending on the industry, it may be one to three years before an overseas business will generate a meaningful contribution to the bottom line. Having a good story to tell about the business’s home market, lends credibility.
  • Determine for which markets the company’s product or service is best suited. It is much better to focus on one or two markets at the start. Expanding to English-language markets are generally easier, but subtle difference in language exist even between the U.S. and Canada. Some such markets, such as Ireland, the U.K., Australia, New Zealand and Canada, have added language requirements. Canada requires French, and the U.K. and Ireland may require the general EU languages and regulatory approvals, but at least communication can be in English. If the owner is fluent in another language that expands the field, he or she should be aware that changing the packing, advertising, etc., will be expensive and sometimes difficult.
  • Compatibility and regulatory issues should be addressed. For instance, in the case of toiletries and other soft goods, are the ingredients permitted? Be sure the measurements of contents are in metric as well as the U.S. standards. In the case of foods, genetically modified foods generally aren’t permitted in the EU, and it may be difficult to prove an item is not genetically modified. In the case of electrical or electronic products, it is important to recall that most markets in Europe and Asia have different electrical systems from the U.S.
    Generally, one has to prove that a product fits that country’s requirements (many of which are different from those of the U.S.). In the case of software, user-interface of programs will have to be translated into multiple languages. Not everyone speaks English, and, for example, the French spoken in France and Canada are very different and may necessitate different translations. Computer- generated translations are generally insufficient; translations should be reviewed by a native speaker of the language in the country the business is entering.
  • All markets require investment in order to prosper. Operating at break-even for the first year or two is a good way to do this. Except in unusual circumstances a business doesn’t want to be out of pocket to support an international start-up. But some investment is necessary.  Consider also a partner domiciled in the targeted countries.

If the company has not done so, it is important to register trademarks or service marks as early in the process as possible. Appropriate patents should be registered. When developing a new mark, consider availability in major overseas markets as well as the home market.
Above all, be careful and practical and understand that the process is not a quick fix but rather a slog, with potential rewards for the company.

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