How The Export Business is The Fasting Growing
Founded in 1956, Pensacola’s Bell Steel has provided structural steel fabrication for projects around the world, from Greenland to Thailand to Egypt to Peru, including 100 overseas U.S. embassies and military installations.
While it began its foray into exports by partnering with the military, the company has branched out to other projects over the years — and an estimated 30 percent of its sales are now attributed to its export business.
CEO Randy Bell’s keen eye for new business has been part of the company’s overseas success.
“I like to vacation in the Caribbean. Each place I go to I get in a rental car and drive around looking for building projects and contractor contacts. I call them when I get back home — and I get one or two jobs each time,” Bell told the Gulf Coast Trade Alliance’s World Trade Conference earlier this year.
Statistics show that companies choosing to get into the export business experience 15 percent faster growth, pay 15 percent higher wages and realize a 12 percent higher profit than those companies that don’t.
And, consider this: Nearly 96 percent of consumers live outside the U.S.
Two-thirds of the world’s purchasing power is in foreign countries.
“If you’re not thinking internationally, you have a failing business plan,” says Gray Swoope, Florida’s secretary of commerce and CEO of Enterprise Florida.
The export business for Florida companies was a bright spot during the Great Recession. Indeed it was the only sector of the Florida economy that continued to grow (by double digits) and thrive.
And now more attention is being paid to the increasing overseas demand for American-made products and services coming from a growing middle class in countries like India and China. India’s middle class is estimated at 350 million people — more than the population of the U.S.
“Our emphasis is moving from finding clients for existing exporters to export diversification and putting more companies into the export business,” says Manny Mencia, Enterprise Florida’s senior vice president for international trade and business development. “Forty-nine percent of the manufacturing sales in Florida are going to an international client. Nationally, it’s only 20 percent.”
U.S. exports to Hong Kong alone grew by 40 percent last year.
Some of that increase comes in agricultural products.
“We’re witnessing rapid economic development,” said Florida Agriculture Commissioner Adam Putnam. “As incomes expand, so does the diet. And that’s an opportunity for Florida agriculture. When incomes rise, people can afford the higher quality ag products we offer.”
The state’s $4 billion ag export business supports 100,000 jobs.
Last year Florida products were exported to 170 countries, with South Korea being the state’s fast growing market, increasing by 43 percent in the past five years. The state sells $6 million in horses each year to South Korea for its budding racing industry.
Florida is already home to 60,000 exporting companies — and 96 percent of them are small businesses, according to Michael Myhre, CEO and state director of the Florida Small Business Development Center Network.
Just thinking about a foray into the export business can be overwhelming. But a major key to success lies in research — and then knowing where to go to get help.
“Exporting is a marathon, not a sprint,” Andrew East, CEO of Alternate Energy Technologies in Green Cove Springs, said at the International Days Conference sponsored by the Florida Chamber of Commerce last spring. “You should do in-depth research. It’s important to understand the cultural and religious practices and the legal framework in the country you want to export to. In some countries, it’s more like a relationship than a contract. It’s more like a marriage, while in the U.S. it’s more like speed dating.”
For those interested in exploring the idea of going into the export business, an important thing to remember is that you don’t have to go it alone.
State and federal agencies are more than willing to help businesses expand their global footprint by organizing trade missions to countries around the world and setting up meetings with businesses interested in making a deal.
The U.S. Department of Commerce has a presence in countries around the world. For a small fee, Commerce employees in those countries can do market research for American companies looking to expand globally and set up contacts for one-on-one meetings. Those meetings can be arranged during trade missions organized by Enterprise Florida, which has international offices and produces the Florida Export Directory, designed to bring buyers together with Florida providers of goods and services.
If you’re ready to take your business global, the Florida Small Business Development Center Network can connect you with international trade specialists who provide one-on-one consulting, help in developing a customized export marketing plan and some training.
The export marketing plan, which the SBDC provides in partnership with Enterprise Florida and the U.S. Commercial Services, can cost as little as $500 while providing: readiness assessment, industry analysis, market analysis with target market recommendation, a review of overseas trade opportunities and an action plan. To qualify for SBDC help with a plan, a company’s products must be at least 51 percent U.S. content, the company must have been in business a minimum of two years and have five or more full-time employees and $500,000 to $10 million in annual sales.
Steps to Export Success from the U.S. Small Business Administration
- Determine if your business is ready to begin exporting. (You can take an online self-assessment at export.gov, provided through the SBA.)
- Get counseling. The federal government provides free counseling services to help small businesses obtain expert financing and locate business opportunities overseas.
- Develop an export business plan, setting specific goals and milestones to success.
- Conduct market research to learn your product’s potential.
- Find buyers. Some of this can be done through trade missions or trade shows.
- Investigate financing opportunities.
Where To Get Help
- Trade Information Center, a U.S. Commercial Service resource: export.gov
- Enterprise Florida, Inc.: eflorida.com
- Florida Export Directory: floridaexportdirectory.com
- Office of International Trade, Small Business Administration: sba.gov/oit
- Official Export Promotion Magazine, U.S. Department of Commerce: thinkglobal.com
- Small Business Development Center Network: FloridaSBDC.org (In Northwest Florida, the SBDC has offices in Tallahassee, Fort Walton Beach and Pensacola.)
Some Financial Tips
- Before you decide to export your goods or services, you want to consider payment terms.
- Can you afford the loss if you are not paid?
- How long have the buyers been operating, and what is their credit history?
- Are there reasonable alternatives for collecting if the buyer doesn’t pay?
- If shipment is made but not accepted, can alternative buyers be found?
- How will the payment terms affect your cash flow?
Some Common Trade Problems
- Tariff and customs barriers
- Service barriers
- Standards, testing, labeling or certification barriers
- Rules of origin
- Government procurement contract barriers
- Intellectual property protection problems
- Excessive government requirements
- Excessive testing or licensing fees