The United States may be a manufacturing powerhouse, but did you know that a whopping 75% of our manufacturers don’t export their products internationally? That means only 25% are tapping into the massive global market outside our borders, which is 95% of the world’s population. This means 75% of U.S. manufacturers limit themselves to a market comprising only 5% of their potential reach.
This disparity begs the question: why aren’t more manufacturers taking advantage of this tremendous opportunity? Let’s explore the five main fears that keep Rhode Island small businesses from expanding into international trade and how you can overcome them. We spoke to international trade expert Maurice Kogon, who is President of Kogon Trade Consulting, a pro bono mentoring service based in Torrance, CA.
1. My Business is Too Small
You may think your business is too small to expand globally, but size doesn’t matter as much as you think. 95% of U.S. exporters are small to medium-sized businesses, many with fewer than 500 employees. The real question isn’t about the size of your company but whether or not there is demand for your product outside of the U.S.
By reviewing U.S. export statistics and searching for trends in demand, you can determine if your product has a potential international market. Small businesses with as few as 10 employees can thrive globally.
Takeaway: International success all comes down to your product.
2. I Won’t Get Paid
Many Rhode Island small businesses and manufacturers share the same concern about receiving payment from foreign buyers. However, there are several options for protecting yourself and your business.
Letters of credit can shift the payment responsibility to the buyer’s bank, giving you peace of mind. You can also use documentary collections, which work similarly to an escrow, ensuring the buyer pays before they get their hands on your product. Plus, export credit insurance can cover up to 95% of your shipment’s value, providing further security.
Takeaway: Learn your options for protecting accounts receivable.
3. Expanding Into International Trade is Too Complex
International trade can sound complicated and daunting with differing rules and paperwork requirements. Thankfully, that’s when you can rely on expert freight forwarders. They handle all the nitty-gritty details, from staying current with ever-changing regulations to preparing documentation and quoting transportation costs. By partnering with a well-trusted freight forwarder, you can focus on running your business while they take care of the trade complexities.
Takeaway: The right partners make expansion possible.
4. My Intellectual Property Will Be Stolen
Another common concern for small business owners is the risk of intellectual property (IP) theft. While this is a legitimate concern, it is not unique to international markets.
Rhode Island small businesses can protect their IP by obtaining patents and trademarks in foreign countries, just as they would domestically. Additionally, relying on copyright protections can help safeguard your products.
Takeaway: While there is always a risk of infringement, robust protections and legal resources can allow manufacturers to enter new markets confidently.
5. I Don’t Know the Global Market
When it comes to your livelihood and protecting your small business, the unknown can be scary – navigating different cultures, market preferences, and business practices can be overwhelming. Luckily, you don’t need to enter this new market alone.
Organizations like the U.S. Department of Commerce and the Rhode Island Small Business Development Center (RISBDC) offer expansive resources to help you feel comfortable entering the global market. From no-cost workshops and advisory services to connecting you with experts, these organizations provide all the support you need.
Takeaway: There is organizational support as you cross this bridge.
Get Help Expanding into International Trade
While fears surrounding international trade are valid, they are not insurmountable. By addressing concerns about size, payment security, complexity, intellectual property, and the unknown, Rhode Island small businesses can unlock the potential of the global market.
The RISBDC is here to help every step of the way. Reach out to connect with an advisor who can ensure you are export-ready and guide you in tapping into the vast opportunities of international trade.
The Rhode Island Small Business Development Center at the University of Rhode Island employs a dedicated, experienced, and knowledgeable staff of business counselors and administrators who can assist you in growing your business. Register now for free, confidential business advice from our advisors here—call (401) 874-7232 to schedule a counseling appointment or attend our free webinars.
