Tapping into the vast global marketplace sounds great in theory, but if you are like many small business owners, the logistics of making your exporting dreams a reality can be overwhelming. That’s when it makes sense to consider using an export management company for your first foray into international trade.
Yes, direct exporting—where you handle every aspect of the process — does provide the best opportunity to grow your sales and your profits. But the significant commitment in managing everything from learning cross-border distribution to establishing in-country business partnerships or joint ventures often isn’t worth the effort.
With an export management company (EMC) at your side, you can tap into international growth while maintaining your domestic business (and your sanity). The secret lies within developing an indirect exporting strategy using an EMC.
An EMC acts as your export department. What’s more, an EMC functions as a branch sales office or domestic wholesaler—they make money by selling your products. While an EMC might represent products that are complementary to yours, they do not represent competing products.
With thousands of EMCs to choose from, it’s important to find the one that is the best fit for your business. Here are some tips to help you narrow down the potential candidates.
1. Ensure the EMC knows your industry and target market. The vast majority of EMCs specialize by products, by foreign markets or by both. Because exporting, like all other sales, requires solid relationships with customers, select an EMC that has a track record for your type of product in the markets you want to reach.
2. Negotiate reasonable financial arrangements. Financial arrangements between EMCs and their suppliers vary widely. But most EMCs do not take title to your property. Unfortunately, the risk of loss falls on yours and the EMC’s shoulders.
Like many outsourced sales operations, EMCs often work on a commission. To make it worth your while, the commission should be equal to, or better, than what you pay to your best domestic sales reps. And don’t forget to negotiate how costs will be handled for special services or events, such as participation in a trade show or an extensive advertising campaign. Like domestic sales efforts, you’ll see better results with marketing support.
3. Agree upon acceptable working arrangements. A major disadvantage of using an EMC is the loss of control over your brand and marketing. For this reason, the working arrangements should be vetted as carefully as the financial arrangements are. You’ll want to make sure the arrangement provides for regular, on-going communication, such as monthly reports on activities and successes. You may also want to retain the ability to sign off on advertising campaigns or other big-ticket marketing events.
If you’re interested in locating an EMC to jumpstart your exporting efforts, try visiting the Federation of International Trade Associations. In addition, check out this list of sources for exporting information as well as some options for export financing.
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