SB Summit - Finding New Customers in a Challenging Economy

by Ricardo Harvin

Onto the breakout sessions, this one on the opportunities for small businesses in doing business internationally. Moderated by Leslie Schweitzer, Senior Trade Advosor, U.S. Chamber of Commerce, the panel discussion and Q&A session highlighted the fact that, while there are challenges in expanding globally, the results can be well worth the effort.

Both of the panel members, Howard Stewart  - President & CEO, AGM Container Controls, Inc., and Steve Anderson - President, Meier Architecture - Engineering (an employee-owned company), opened by giving an outline of how their small companies have used trade to grow over the past twenty years or so.

Leslie also pointed out in her opening remarks that the "Bright light in this economy are U.S. exports". She continued, reiterating the fact that 95% of all consumers live outside the U.S., and that not only do we continue to have a trade surplus in many specific areas of the economy, when removing oil from the equation, we have an overall trade surplus. Lastly, she did remind everyone that getting involved in international trade is not necessarily an easy step.

In his introduction, Steve covered a few key points on how their domestic company gradually become involved in global trade. His company recognized that part of an overall strategy for long-term success, they needed to balance commercial work with Federal work. Through the years, the relationships they built through their Federal security contract work opened the door to international opportunities.

Because they've maintained a healthy balance of commercial and Federal work, even in this tough economy they've had to increase staffing levels to keep up with increased demand. Along the way, they've had to learn to deal with issues such as working in favorable and unfavorable overseas environments, and getting shots for their employees.

While Steve rose through the company to a leadership role, eventually taking over the company from the founder as it became an employee-owned concern, Howard took over his company from his own "founders" - his parents. His Mom was also in attendance - Howard claimed it was partly to make sure he got things right.

His story was similar to Steve's in that the role of international business wasn't a key concern in the company's early days. Back then, trade accounted for about 1% of their total revenue, and the owners were fine with that as they focused on domestic business. After having the opportunity to speak to a group in Germany, things began to change and that number grew to 5%.

Along the way, Howard said that he's learned that choosing partners is important when working abroad, that they've made some good choices, and some bad ones, and said not to be afraid to work with another company if things aren't working out.

As an example, he told the story of one distributor they worked with for 20 years that generated $10-20,000 per year - which was much less than other distributors selling their products in similar territory. His parents were happy with getting something, figuring that was revenue they wouldn't have had otherwise, but Howard was sure that there was money being left on the table. When he spoke directly to them and asked how they were marketing their products, it became clear that they were relying on word of mouth and nothing else.

That opened the door for making a change, and when a competitor suggested that they create a relationship, Howard took the jump. That leap in faith led to a leap in revenues. After eight years, the relationship with the competitor proved much more fruitful than the relationship with the old distributor as that $20,000 a year grew to $8 million a year.

Howard's lesson was, when working internationally, look for distributors and other partners whose goals are aligned with yours.

This was a relatively short session but there was time for a Q&A period, here's some of the highlights from that:

Question: One of the concerns I have with taking patented technology international, how do you deal with that?

Steve:  I recently dealt with an issue with our wheelchair lifts and patent protection. I have decided that basically, I am letting the international patents go, except for a few key countries. I could pay a lot to cover scores or hundreds of countries, but decided that there weren't other companies in most of the world that can do what we do. I'm in the process of creating a new wheelchair product that could cut our costs by 20-25%, and when that happens, I'll have to take another look to see if we should pursue protections.
 
Question (follow up): Have you had to defend your patents?

Steve: We've only had an issue with one country copying one of our product. They were making thousands of copies of a product that we usually only make tens or scores of. When I tested their products, I found that they were actually stronger than ours, so I started buying them to sell to our non-defense customers.
 
Leslie: We've focused on several key countries on this issue. There are some horror stories out there, but this was an unusual situation that we don't normally hear.

Question: How do  you handle getting access to countries?

Steve: We've had some assistance with agencies such as the Department of Energy (one of their contracts) to get travel access.

Howard: We're 60 miles from the border, but have had trouble. We've reached out to different agencies for help, with little help.

Leslie: There are many government resources for both foreign and commercial service.

Question: How do you find federal contracts, is there some way to pinpoint them?

Steve: Yeah, it's not easy. We're on BizOps(.gov). The biggest advantage is to have a code that identifies you as a small or minority business. Now that we're a mid-size business, that's more difficult to use. I'd like to be able to tell you to "go here" and that's it, but that's not the case.

Leslie: Call 1-800-USATRADE. You'll get a real, live person and if you ask a question, they will find the answer for you. Also, one of the great things about a meeting like this is that you can make connections.

Leslie closed the session with a few key points and a plug for an important trade event this fall:

One of the misconceptions of trade is that the only beneficiaries of trade are large companies, and that's not true. 97% of international traders are small businesses.
 
I would urge all of you to contact us and tell us your stories so we can share them. It's a compelling way to spread the message on trade.
 
One more note, I invite all of you to join us Oct 8-9 for One Voice for Trade (). It's about getting players such as yourself to share stories of how to get involved and be successful in international trade.