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How does the U.S. Federal Export Promotion Stack Up to Other Exporting Countries?

Re-blogged from the National District Export Council website www.districtexportcouncil.com.

Export Expenditures

On February 28, 2013, Daniel Ogden, Chairman of the National District Export Council,  testified before Congress during a hearing of the House Small Business Trade Subcommittee on the development by the 113th Congress of a small business trade agenda.

In the Testimony, Daniel Ogden provides a comparison of U.S. federal export assistance programs with government-funded export assistance in other large exporting countries. Highlights include:

  1. The UK’s Passport to Export program for SMEs provides free one-on-one mentoring, subsidized training, and a subsidized visit to an overseas market.
  2. Germany provides support to firms exhibiting in trade fairs abroad.  60 percent of all German firms participate in trade fairs; two thirds of which exhibit abroad.
  3. France’s Trade Missions Overseas program provides up to $3,750 to SMEs and includes French pavilions at trade fairs, products and displays, and other t trade promotions.
  4. The Netherlands and Australia have grant programs that pay (up to $110,000 in the Netherlands) for new exporters’ market development costs.

Ogden’s testimony also includes several useful facts on US export assistance including:

  • An overview of the District Export Councils and their purpose
  • Opportunities and challenges for U.S. small business exporters
  • Current organization and proposed reorganizations in federal trade promotions
  • National District Export Council’s position and recommendations to Congress on federal trade promotion

Click here for a PDF copy of the Testimony Transcript, or see the Testimony video below. (Testimony starts at time marker 8:55.)

For more information on the National District Export Council, please refer to their website at http://www.districtexportcouncil.com.

Re-blogged courtesy of Ray Hays, Member of the Arizona District Export Council

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$30 Million in Grants for SME Exporters of U.S. Products and Services

In fiscal year 2011, SBA awarded 52 grants totaling $30 million

money globe

By Ray Hays, International Consultant and Member of the Arizona District Export Council. 

Re-blogging of this post is permitted and encouraged.

As many U.S. small and medium-sized enterprises (SMEs) compete for revenue from new markets, they often overlook the global picture: Promote your products and services internationally. While it sounds daunting, it’s often a simple matter of funding and international expertise to sell your products and services into global markets.

What if your company had the opportunity to leverage international business experts from the public and private sector to market your product internationally? At no cost?

Welcome to the best kept public secret in international business.

The Small Business Administration (SBA) offers grants through the State Trade and Export Promotion Grant (STEP) program. Over the last year, $30 million in export promotion grants were awarded through the SBA, and the same amounts are expected for 2013 and 2014

The rules and amounts of the grants will vary by state, but in many cases, U.S. exporters of products and services are eligible for thousands of dollars in export promotion grants.

Depending on the state, these grants may be applied toward the travel and fees of several export promotion opportunities:

  • Trade Missions – These are usually managed through the individual state trade agencies or through federal agencies, such as the U.S. Commercial Service. These trade missions typically gather attendees from a sector to participate in a multi-country promotional visit, supported by the the Trade Representatives at U.S. Embassies in those countries.
  • Trade Shows and Fairs – Similar to the trade missions, your state and federal agencies may attend a industry-specific Trade Show, with U.S. small businesses representatives.
  • Individual Company Promotion Events – Through the U.S. Commercial Service and other organizations, U.S. businesses have the opportunity to have a custom program that helps the American company to identify buyers, distributors, licensees or other partners in key international markets. These programs (such as the USCS Gold Key Program) typically leverage the resources of the U.S. embassies and consulates in the international markets.
  • Privately Contracted Export Marketing and Promotion — A range of U.S. companies work closely with the USCS and other agencies to provide contracted export assistance to SMEs. Often these private contractors supplement existing U.S. government programs, providing small businesses with the management guidance and experience to maximize their success in their export marketing efforts.

As a (very rough) example, a Trade Show may require a travel budget of $5,000 and exhibition costs of $5,000. Some U.S. companies can qualify for reimbursement of 75% or more of the travel cost and 100% of the exhibition costs through the STEP Grant program. This would bring the cost of a $10K trade show into the range of $1,250… Other export promotion activities may be covered in-full.

Of course, a U.S. company should not strike out blindly into the international marketplace. Your company will need to identify target markets, evaluate risk/returns based on the country regulations and demographics, build a model for international expansion and finally, execute on this plan.

If you do not have the international expertise in-house, you can work with a U.S. contractor — a consultant or management firm — to plan and deploy the export promotion strategy.

Whether your company builds an international team in-house or contracts international management specialists, this would be a good time to take action. The second year of SBA STEP Grants are already awarded, and the third (and final) year of STEP Grants are awaiting proposals. Go get your piece of the international pie.

In addition to these grants, export financing programs for SMEs are available through SBA and Overseas Private Investment Corporation (OPIC).

For resources, please contact your regional District Export Council (Google it for your state), or the nearest U.S. Commercial Service Export Assistance Center.

Having personally participated in over 40 international events and trade missions through the USCS, I highly recommend using their services. I am currently a Member of the District Export Council in my home state of Arizona, which works closely with the USCS on export promotion efforts.

Regardless of your location, please feel free to contact me if you would like more information on these programs, and I would be happy to point you to the appropriate export assistance resource in your local market.

This article is based on current knowledge to-date of STEP Grants based on various government websites. The program details may vary by state and rules are often updated. For the latest information please click on this link for the SBA website page on the STEP Grants.

Please re-blog or re-post this article to your social media groups and professional contacts interested in international business.

Copyright Ray Hays, Envoy Investments LLC. All rights reserved. Re-blogging of this post is permitted. Referrals to http://www.rayhays.com are appreciated.

Ray Hays owns Envoy Consulting, which provides international business development guidance for U.S. product and service exporters. Ray is a Member of the Arizona District Export Council.  Email: ray@rayhays.com, cell: 714-797-3386, Skype: Ray_Hays.

Small Businesses of the World Unite!

….We have nothing to lose but our chains!  

A Small Business Manifesto by Ray Hays, www.rayhays.com  

Bottom line, it’s up to small businesses to save the world. Big business, financial markets and politicians have lost touch with the common man.  

They’ve also lost touch with reality. They worship false deities – mysterious and faceless entities, with names like DOW, S&P, DAX and Hang Seng. When the financial gods become angry, the politicians and Central Banks attempt to appease them through complex rituals in which they manipulate magic potions with names like the debt ceiling, interest rates, financial regulation, fiscal policy, money supply and stabilization programs. They posture and debate how these potions should be mixed, while the world’s economy sits on the brink, awaiting some miracle to emerge from the voodoo fog bank. 

So what can we do as small business owners? 

For one thing, spend more time working on your business and less time worrying about the economy. It seems that the only certain thing in the financial markets is uncertainty.  Over the past week, we’ve heard it on the news ad-nauseam: “The market shows signs of uncertainty.” Really? What the heck does that mean? Just tell me how I can retrieve my retirement account as it swirls down the toilet. 

Then some talking head comes on the TV screen and explains that the uncertainty might be attributed to unemployment indicators… or the debt ceiling… or the Standard and Riches credit rating… or rumors that a camel passed gas in Oman. 

We stand back and scratch our heads, inwardly embarrassed that — despite our years of business experience, and regardless of our academic pedigrees — we have no clue what they’re talking about. Join the club of ignorant masses. Unless you are one of the minions in the financial markets, you are probably mystified by the swirling market forces that shape the destiny of the global economy. 

However, in the real world, business is not about some abstract financial benchmark or macroeconomic policy. As small business owners, we know that business is about people: our employees, our customers and our community. It’s about hard work and good management. It’s about simple concepts, like sales, costs and profits. 

Who will be our economic savior from the economic winds of uncertainty?

Politicians? Stock market gurus? Central Banks? The banking sector? The real estate sector? Multinational corporations? China? God? Superman? … Superheroes aside, I would place my bet on the small business sector.

 Look at it historically. Prior to the industrial revolution, small businesses represented the heart of economic development in most countries. Before the days of “big business” and the stock market, small entrepreneurs built the foundation on which the industrial and financial giants of today stand.

However, today, big business and politicians are tied to the hip with global financial markets. (Or is it vice-versa?) Comparatively, small businesses have significantly more freedom and leeway from the market. Sure, small businesses are impacted by global market forces, including inflation, interest rates, labor costs, fuel prices, etc.  Sure, economic downturns destroyed many small businesses, which were defenseless to the onslaught.

Yet small businesses are more nimble than their large brethren. We can adjust more quickly to market risks or opportunities. A small business can re-brand in a week, whereas it takes United and Continental Airlines over a year. We can completely change our business strategy without worrying about the perception of shareholders and our stock price on Wall Street.

That said, increasingly small businesses are burdened with chains of the global economy, which prevent us from change and strip us of our independence.

It’s time to take control of our destinies. Long Live the Small Business Revolution!

Yes, small businesses DO have the power to change the global economy. Let’s take the example of the U.S. market. According to the Small Business Administration, small businesses (fewer than 500 employees):

    • Represent 99.7 percent of all employer firms.
    • Employ just over half of all private sector employees.
    • Pay 44 percent of total U.S. private payroll.
    • Have generated 64 percent of net new jobs over the past 15 years.
    • Create more than half of the nonfarm private gross domestic product (GDP).
    • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
    • Are 52 percent home-based and 2 percent franchises.
    • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
    • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.

Definitions and perceptions on small businesses vary. For example, in Europe a small business is identified as fewer than 50 employees compared to 500 employees in the U.S.  Some consumers perceive franchises as “big business chains” that kill off small business competitors. In reality, a significant majority of franchisees are small businesses that are locally owned. In terms of franchisors (the franchise headquarter companies), the majority of them are also small businesses. The big players, such as McDonald’s and UPS, are more the exception than the norm.

Definitions aside, small businesses play a critical role in the worldwide economy. Think about it this way. If the small business sector could add 10% more jobs, the U.S. economy would erase the rise in unemployment since 2008, which improves consumer spending, which grows retail sales, etc. In short, shifts in the small business sector can make a big impact on the world economy.

Okay, I’m on-board with the small business revolution. What’s our goal?

Break the chains of the financial markets!  What are the chains that shackle our small businesses?

Big government or a big business clients – If more than 25% of the revenue of your small business comes from on government or big business, you are chained to the market.

Big business vendors or suppliers – If your business relies on big businesses suppliers, you are chained to the market.

Big banks – If your small business is dependent on large banks – for small business loans, etc. – then you are chained to the market.

Financial services – If your small business is in a sector that deals with financial services or commodities, you are chained to the market.

Real estate – If the health of your business is impacted by booms or busts in the real estate market, you are chained to the market.

“Discretionary” consumer products and services – If your revenues comes from non-essential products and services that are subject to discretionary income, you are chained to the market.

Which chains weigh down your business? How heavy are they?

Realistically, most small businesses will always be connected to the market to some degree. As a small business owner, what chains can you break and what chains can you weaken? How can you minimize your dependence and exposure to big business and financial markets? Possible solutions include:

Completely reinvent your business – If you are in real estate or financial services, either get out of the business or diversify into other sectors. Ask yourself:  If I were not in real estate or financial services, what other business would appeal to me? Don’t wait. Start building your business life boat now.

Introduce new products and services – Ask yourself what new, innovative products and services you could introduce, which are recession-proof? For example, if you own a catering company, you could begin to sell affordable school lunch packages for kids.

Replace your big business and government customers with small business customers – Ask yourself, if my big customers disappeared tomorrow, what other types of small businesses could I service? This may require changes to your products and services, as well as changes to your strategy of marketing and sales. Don’t wait for those big clients to disappear. Do it now!

Replace your big business vendors with small business vendors – This may be difficult, and it may cost you more money, but ask yourself: As a customer, am I more valuable to a big vendor or a small vendor? A small vendor is more likely to provide you with personalized service, they are more likely to refer clients to you, and they are more vested in the success of your business. Is that worth paying a premium for the product? In most cases, the answer is “yes.” Most importantly, you will help another small business owner to break their chains to the market.

Cut out the big company middle man – One advantage of the global economy is that small businesses are better able to simplify their supply chain. Ask yourself: Why can’t I just go to the source for products? For example, if you sell uniforms that are made in China, do you really need to purchase through a large distributor? Why not work directly with a small manufacturer in China? Again, you will have more control over your supply, better leverage and in some cases, better pricing.   Tip: If you have no idea of how to import, you may wish to engage an international business consultant to help you identify overseas suppliers, and engage a small, licensed customs broker to manage the import process for you.

Replace your big bank with a small bank – Like all small businesses, small banks are more flexible than big banks. Small banks are hungry for your business, and relatively speaking, your small business will be a much larger client to them.

Hire more employees – During a downturn, fear of “uncertainty in the market” prevents small business owners from hiring. Step back and evaluate your values as an employer and the mission of your company. Do you believe that your employees are your most important asset? Many good employees are on the market today. If you add two or three… or ten “top-performers” to your team, what would this do for your operational capacity or your sales growth? How can do your part to reduce unemployment and still prosper as a business?

Entrepreneurship, innovation, customer service, employee loyalty, family values…  These are the enduring hallmarks of a successful small business. With these values in-mind, it’s time to level the playing field and allow small businesses to chart their own destinies.

Now, small business revolutionaries… Go forth and save the global economy!

Article Copyright © Ray Hays 2011 All Rights Reserved. Electronic distribution is permitted with citation of author’s name.