Because of the lower value of the dollar and increased demand abroad, American companies have sought new markets overseas. This includes small companies as well as large.
U.S. exports rose to more than $170 billion in June 2011 from $151 billion a year earlier and $128 billion in June 2009, the Commerce Department reported this month.
Small businesses helped fuel those numbers, according to Fred Hochberg, chairman of the U.S. Export-Import Bank, which finances U.S. exports. The agency said in September 2011 that since October 2010, it has approved a record-high $24.5 billion in export financing for companies of all sizes, including some 2,142 small businesses, up from 2,036 last year and fewer than 800 in 2006.
Small businesses selling overseas have significant concerns, among them that they might inadvertently violate the foreign state’s laws or trade practices or that their foreign clients won’t pay their bills. Small businesses already occupy a precarious position in the American marketplace. They often have to survive from month to month and are ill equipped to handle defaults on large payments or the potential liability of violating laws while attempting to achieve international growth.
Although small businesses face the same challenges as large businesses, they are not able to draw upon the same resources. Unlike large businesses, which frequently have pre-existing relationships with giant international law firms and consultants to ease their transition into foreign markets, small businesses need to identify and harness a team of advisors with appropriate experience and networks. They need to learn how to cultivate partnerships with smaller law firms and consultants that understand the needs of small businesses and can help them grow overseas.
By obtaining legal advice before entering a foreign marketplace, a business can develop the sound footing that it needs before it can take meaningful steps toward growth abroad. Law firms can also help businesses learn how to appropriately develop relationships with foreign governments and businesses. For example, we have helped our clients to identify local counsel, local accountants, translation services, and personnel locators.
Even after the recession ends, U.S. businesses will continue to need a working knowledge of foreign markets as demand for their services continues to rise.
There are a few important things that small business owners need to look for in a partner that will help them grow their overseas businesses: experience working overseas, the ability to make contacts with foreign businesses and governments, and an understanding of how small businesses work.