U.S. Small Business Administration

Ron Johnson Interview with John Joyce

 

Ron Johnson: U.S. small businesses looking to grow need to think outside the box by thinking outside of the U.S. borders. In this series “Where Will Your Next Customers Come From?” we’ll explore what it takes to become a successful exporter and the vast array of U.S. government services to help you grow.

Hi, I’m Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource and today, my guest is John Joyce, SBA’s Export, Finance and Trade Manager in Boston, Mass. How are you, John? It’s good to have you on the program.

 

John Joyce: Thank you very much, Ron. I’m glad to be here.

 

Ron Johnson: John, what are the primary reasons small businesses should consider exporting?

 

John Joyce: Well, one of the main reasons is that most of the world’s consumers and some statistics show 95 percent, actually live outside the United States and they represent two thirds of the world’s purchasing power. For consumer products, that’s pretty relevant and for other products, it’s probably less of a percentage but it’s still significant and let’s just say that there’s a significant sales potential that is not tapped if a business is not exporting.

 

Ron Johnson: Is there a way to determine what types of small businesses become say, successful exporters?

 

John Joyce: Any industry really -- most manufacturers or service providers that make a product that can be sold in a foreign market and that covers most companies. It is a good idea that they’ve already been established and have a good track record in the domestic market as a starting point.

 

Ron Johnson: John, I know you’ve heard of some of the myths and realities about exporting that might deter a small business from getting into exporting. What are some of these myths?

 

John Joyce: Well, there are several and they’re true in some degree and truly myths in others. For instance, exporting is considered too risky by some companies and there are additional risks involved, but they are identifiable and you can mitigate those risks using affordable export assistance that’s available. And in some cases, that myth is completely untrue. For instance, in the Canadian market, there’s really no more risk from selling in the U.S. domestic market.

Another myth might be that the domestic market is secure and companies can depend on it and that’s really not true any longer. Globalization has made it easier to buy and sell products in multiple markets and that’s a two-way street so that means it’s easier for U.S. companies to export but it’s also easier for their overseas competitors to come into their domestic market and sell. So I think that it’s advisable to meet them in their territory than vice versa.

A third myth is that exporting is too complicated and similar to the idea of riskiness, the complicated part of it is that there is additional paperwork. Yes, there are things that you have to be aware of but there’s a lot of assistance to find what those issues are and deal with them and make the move into exporting.

 

Ron Johnson: There are many advantages to exporting, John. Can you share a few of those with us.

 

John Joyce: Well, the primary one is the primary goal of most businesses which is to increase sales and profits. As we talked about earlier, there is a sizable market outside the United States that is untapped if you’re not exporting. It also extends a product life cycle. If you have a product that’s fairly mature and may be losing market share in the United States, in foreign markets there might be much more potential.

And also there are seasonal differences. A product that is seasonal, for instance, sold mainly in winter weather, well, South America’s winter is our summer. So that extends the sale season for those kinds of products.

Also there is the issue that “Made in America” or “Made in the U.S.A.” is still a good marketing tool and it gives a U.S. company a competitive edge in foreign markets. There is a perception, and a true perception, that U.S. products are high quality and represent innovative goods and services.

There’s again, a lot of resources available to help companies deal with the issues that are involved in exporting, from the U.S. government and from state governments, as well.

 

Ron Johnson: Where should our listeners go for more information on exporting?

 

John Joyce: I would encourage our listeners to contact the SBA through our website which is www.sba.gov/international and that will link them to our international part of our website and also the government-wide website is www.export.gov which will connect them to all the other agencies, including SBA, with export services.

 

Ron Johnson: John, I’d like to thank you for being on the program and sharing some valuable information on exporting.

 

John Joyce: Thank you very much, Ron.

 

Ron Johnson: In Part II of the small business series on exporting, we’ll explore how to develop an export strategy. Until next time, this is Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource.

 

[End of transcript]

 

U.S. Small Business Administration

Ron Johnson Interview with Paula Murphy

 

Ron Johnson: U.S. small businesses looking to export will need to develop an export strategy. In Part II of our series, “Where Will You Next Customers Come From?” you’ll need an exporting plan if you want to succeed in international markets.

Hello, this is Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource. And with me today is Paula Murphy, Director of the Massachusetts Export Center, part of the Massachusetts Small Business Development Center Network. The export center is the state’s leading provider of export development services and is widely recognized by the local international business community as an important resource for Massachusetts businesses. Small Business Development Centers partner with SBA to provide counseling and training to entrepreneurs.

 

Paula, it’s good to have you here today.

 

Paula Murphy: Thanks Ron.

 

Ron Johnson: What are some of the factors that could help a company to determine whether it is ready to export?

 

Paula Murphy: Well, there are a lot of factors that can help a company to determine whether they are ready to export. I think one of the most important factors is the commitment of the company’s top management. Exporting really needs to be a priority focus for the firm and the top management of the firm need to take a long-term view toward development of export markets and it needs to be -- the top management needs to make exporting a permanent part of the company’s overall business strategy. And they need to devote the financial resources, staffing and time that are going to be necessary to develop and maintain their export operations.

 

Ron Johnson: As a business develops its export strategy, what are some of the key objectives it might want to consider?

 

Paula Murphy: Well, there are many reasons a firm may want to begin exporting but, you know, I certainly believe there are right reasons and wrong reasons and the right reasons for exporting tend to be focused on long-term growth and the overall health of the firm. Certainly, growth and revenue, profits and market share are what many firms can expect if they can develop a successful export operation.

Firms can also expect to see an improved level of competitiveness. This is not just a matter keeping up with their competitors, although this is certainly important but exporting firms become adept at responding to new and different customer needs and this helps to contribute towards their competitive capability even in the domestic market.

Another very important objective is the diversification of risks, this is especially true in the current economy.

Unfortunately, we work with many firms and our phone tends to be the busiest when the U.S economy is not doing well because companies are looking to increase their overseas sales as a way to offset the slump in the domestic economy. But those companies that are exporting will find that they automatically have the diversified sales base if they are exporting to even five countries, so I think diversification of risk is a very important factor.

It’s also important for firms to be specific and realistic with their objectives as they are developing their export strategy, again, keeping in mind that export development is a long term process.

 

Ron Johnson: Wow, that’s a big world out there. So, how does a business assess whether it should begin or which countries it should target?

 

Paula Murphy: Well, it is a big world out there and, especially for a small business, it can be very overwhelming to know where to begin. Small businesses, they need to keep in mind that they don’t need to go global overnight. Sometimes we may be working with a business and they want to be selling in Europe, Latin America, Asia, everywhere within the next year and that might not be feasible and, in fact, a slow, methodical and targeted approach is usually best, especially for a small business. And a company with limited resources is going to want to focus their export strategy to find balance on what is manageable for them so they may end up just picking and choosing a couple of top priority export markets, at least in the beginning.

Many firms already have some idea which countries represent strong export markets for them. For example, they may have some large U.S. customers that are moving manufacturing overseas and they want the exporter, all of a sudden, to start supplying the overseas operation. Or they may receive direct inquiries from overseas customers or overseas distributors through their website, over the phone; they may have interest expressed at domestic U.S. trade shows by overseas buyers, and certainly they probably know where their competitors are selling overseas, if they are. So, there are a lot of factors that may already give a company an indication of where there is a market for them. So, aside from these reactive factors, there is also a lot of market research available so companies can proactively assess which markets hold the greatest potential for their products overseas.

 

Ron Johnson: What methods can a business use to enter target export markets?

 

Paula Murphy: There are a lot of different ways that an exporter can access an export market. There two basic forms of market entry. Direct market entry, where they’re selling directly to a party in the export market and indirect market entry, where the exporter might be selling to a party in the U.S. who then turns around and sells it to the export market.

There is a time and a place where each of these methods -- very small businesses with very limited resources may want to consider indirect market entry where they will be dealing with, for example, an export management company here in the U.S. that would be managing that whole export process for them. But if a company is really serious about exporting, in the long term, they want to make it a permanent part of their business strategy, most businesses, even small businesses are going to be best off going directly.

But even with a direct market entry method, they’re going to be working with some sort of a partner in the export market. And there are a number of reasons for that. If you’re a small business and you want to reach several customers in an overseas market, if you have a local partner in that country, you’re going to be able to reach many more customers in that market than you would if you were trying to export directly yourself. You may also want some sort of a local presence for your company in the market. So if you have a website and you want overseas customers to find you, they’ll have a local person that they can call to purchase your product.

 

Ron Johnson: Paula, once a company has conducted market research, what are some key action items the firm might want to consider as part of its market entry strategy?

 

Paula Murphy: I think one of the first things an exporter should do is develop a profile of the type of partner they are looking to find in the export market. They want to look and see who are the customers of that partner? Are they already selling to the types of customers that that exporter wants to reach? What types of products are in their product line? Is it a good fit for the exporter’s product? Is it complimentary? What geographic coverage does that partner have? Where are their sales channels? What’s their sales volume, market share? What types of marketing activities do they engage in? And what’s the structure of the organization?

And many times, for a small business exporter, it’s usually a good fit for them to find a smaller distributor that can represent them in that overseas market. They don’t necessarily want to go with the largest distributor for their industry, they may have better results with a smaller distributor.

 

Ron Johnson: I’d like to thank Paula Murphy, Director of the Massachusetts Export Center, for the Massachusetts Small Business Development Center Network, for sharing her expertise with us today. Paula will be joining us for the third segment in our series, “Preparing for Global Markets.”For more information on exporting, you can go to www.sba.gov/international or www.export.gov. So, until next time, this is Ron Johnson, with the U.S. Small Business Administration, Your Small Business Resource.

 

[End of transcript]

 

U.S. Small Business Administration

Ron Johnson Interview with Paula Murphy

 

Ron Johnson: In Part III of our series, “Where Will Your Next Customers Come From?” we’ll explore preparing for global markets. Paula Murphy, Director of the Massachusetts Export Center, a part of the Massachusetts Small Business Development Center, counsels small businesses that want to grow by exporting. Small Business Development Centers partner with SBA to provide counseling and training to entrepreneurs. Hi, once again, this is Ron Johnson with the SBA, Your Small Business Resource and I’d like to welcome Paula Murphy to the program. How are you, Paula?

 

Paula Murphy: Thanks, it’s good to be here, Ron.

 

Ron Johnson: Paula, once a company has already determined that it is ready to export, what are some of the internal organizational factors that it needs to consider as it prepares for global markets?

 

Paula Murphy: Well, exporting is not a venture that a company does entirely on its own and the exporter really must rely on partners to perform certain functions. So the business is that -- the company doesn’t need to be an instant expert on exporting in order to start. But what they do need to do is identify potential external partners that can help.

Banks are very important. They need to be able to facilitate payments from overseas so they need a bank that has global trade banking capabilities. The good news is that it doesn’t necessarily have to be a large bank. Small banks these days often outsource global trade banking capabilities to larger partners. They also need to work with a freight forwarder who can facilitate international shipments. Law firms need certain expertise with distribution contracts, intellectual property protection. They may need translation firms to help with their packaging or their documentation and there are also a lot of consultants out there, if necessary, although it is not always necessary for a company to hire a consultant but there are certainly many qualified consultants available.

They also need to identify in-house expertise and assign responsibilities so who’s going to be responsible for international business development within the sales and marketing department? The engineering and product development department probably need to get involved for any product modifications or standards compliance. Accounts receivables people are probably going to be processing international payments, supply chain management people are going to be involved with international shipping, documentation, export regulatory compliance. So they definitely need to identify who is responsible for what, in-house. And then create a written export plan with everybody’s input, including a budget and timeline for implementation.

 

Ron Johnson: Paula, can you tell us, is there anything a business needs to do in order to prepare or adapt its products for export markets? And are there any regulations or laws that the businesses must consider?

 

Paula Murphy: Yes. For many companies, this is an important issue. There are often several technical issues that will need to be addressed. Many companies have technical products that need to be installed, training and support need to be provided so will this even be possible? Are there any special shipping or storage requirements for the product as it is going overseas?

Many products are subject to safety standards overseas so a company needs to assess what those standards are and whether the products -- they probably need to get the product tested to make sure that it complies. Many products that are regulated are also required to be registered with different ministries. For example, we work with many medical device companies and a lot of times, those products need to be registered with the ministry of health in whatever country an exporter might selling to. Also there are certain industry standards that need to be complied with.

And then, virtually every product will have some sort of modification, whether it’s labeling, packaging, product documentation or even the product itself, whether consumer preferences need to be met or if there are also technical modifications needed like electrical voltage. So virtually no product goes straight out of the box, as it is, to an overseas market.

There are also U.S. export regulatory requirements. There are certain countries that we are not allowed to do business in. And then certain products, especially when you get into technology types of products, can sometimes need licenses to be sold to certain countries and certainly anything that falls under the International Traffic in Arms regulations which would be military and defense technology types of this, there are certain countries where those products cannot be sold. So because of these different factors, companies and products that are flexible are often the best suited toward exporting.

 

Ron Johnson: Now, how can a company acquire the expertise or knowledge it needs on all of the processes and procedures that it will need to implement in order to export?

 

Paula Murphy: Well, this is often one of the biggest areas of concern for many new exporters and fortunately it’s also one of the easier challenges to resolve for many businesses. There are free counseling resources on the export process throughout government. Small business development centers provide a lot of one-on-one assistance in this area. And, again, it’s free export counseling in technical assistance. Oftentimes different states have their own trade offices that can also be of assistance. And certainly the U.S. Department of Commerce, through the U.S. Export Assistance Center network can also provide assistance in this area.

So there’s a lot of one-on-one counseling that’s available, either over the phone, through email or even where you can have representatives go out and visit companies onsite. There are also a lot of seminars and training across all aspects of exporting and, again, SBDCs get very involved in this area but even private sector providers get involved in this area. Banks do training, freight forwarders do training, law firms and then, of course, there are loads of webinars and on-demand training. There’s an online resource called globalEDGE out of Michigan State University which has fabulous on-demand export training, export.gov also has some training and, again, there are other government resources.

So, in addition to the counseling and training, there are also lots of publications put out by these same organizations. So there’s really no shortage of information and, in fact, it can be overwhelming once a business discovers all the resources that are available to them.

 

Ron Johnson: Small businesses interested in exporting can find more information at www.sba.gov/international or www.sba.gov. I’d like to thank Paula Murphy, Director of Massachusetts Export Center for the Small Business Development Center Network for providing valuable information for entrepreneurs on taking their businesses global.

Join us in our next segment with Paula as she and I discuss market research. So until next time, this is Ron Johnson with the Small Business Administration, Your Small Business Resource.

 

[End of Transcript]

 

U.S. Small Business Administration

Ron Johnson Interview with Paula Murphy

 

Ron Johnson: Conducting market research is crucial to understanding where in the world your next customers will come from. Nearly 96 percent of the world’s population lives outside the U.S. borders. And with me today to discuss research on foreign markets is Paula Murphy, Director of the Massachusetts Export Center, a part of the Massachusetts Small Business Development Center network, the state’s leading provider of export development services. Small Business Development Centers partner with the SBA to provide counseling and training to entrepreneurs. Paula, it’s a pleasure having you join us today.

 

Paula Murphy: Thanks very much, Ron.

 

Ron Johnson: What are some of the resources and methodologies that a small business can use as it begins gathering research on potential export markets?

 

Paula Murphy: Well, there are two basic kinds of market research: you have primary market research and secondary market research. Secondary market research is what you can find that’s already kind of pre-packaged and prepared. Primary research is where a company might be going out and doing surveys overseas and making phone calls. And the good news is that many small

businesses will find that there is plenty enough secondary research that’s going to be sufficient for their purposes.

There are a lot of free online resources. The export.gov website has a lot of market research on there. They have a whole market research library. Some of the documents that exporters will find there include country commercial guides which are pretty exhaustive guides on doing business in different countries. They list the top prospects for U.S. exports in that country so they might list the top 20 industries for U.S. exporters. They’ll list key contacts, shipping requirements, regulatory requirements, you name it.

They’ll also do a lot of industry specific research on doing business in a particular country. So you may have a company that has industrial machinery, for example, and they’re interested in researching the Canadian market. There may be a market report available on export.gov that will provide an overview of the industry, what the market size is, what the trends are, who the key competitors are, that type of thing.

And there’s also another resource called TradeStats Express which puts, in a nice searchable format, all of our U.S. trade data, and so if I’m a small medical device company and I want to find out which countries are importing the most medical devices from the U.S., I can use TradeStats Express to pull a country ranking of the largest potential markets. So there’s a lot online, and export.gov, in and of itself, is a great place to start and has a lot of information.

 

Ron Johnson: And what are some of the specific factors a company should research when assessing potential export markets?

 

Paula Murphy: Certainly they want to have a broad overview and understanding of the country that they’re doing business in, so it may be relevant for them to pull general information like demographics, economics, political information depending on the part of the world that they’re doing business in, but really, where they’re going to be spending most of their time is on market access. Are there any obstacles that they need to overcome to get that product to the market? Are there any export licensing requirements? What are the tariffs and taxes that are going to be associated with getting that product into the market? Are there any special labeling requirements, regulatory requirements; any other specific product modifications required?

And then finally, they want to really look at the overview of the market and is there going to be potential for their product to be sold in that market? What is the size of the market? How much is being imported? How much is being locally produced? What are the trends? What are the growth projections? Who is the competition?

Many times, exporters, they’re going to be dealing with a new set of competitors if they’re going overseas. Are there any foreign competitors that an exporter has not had to go up against in this market? Are there any pricing issues? What are the distribution channels? What are the promotional practices? And finally, what are the characteristics they should be looking at for a potential distributor in that market?

 

Ron Johnson: Paula, how does a company find the right partner in an export market? Isn’t it a bit like finding a needle in a haystack?

 

Paula Murphy: You know, it is a bit like finding a needle in a haystack but the good news is that there is a lot of assistance available. Also, the more targeted a company can be with defining the type of partner they are seeking and then conducting that research accordingly. It can actually be easier for them to find the right partner.

I did speak earlier during our “Developing an Export Strategy” segment about what a company should look for in assessing and screening potential overseas partners. Once a company knows what type of partner they’ll be seeking, there are specific matchmaking services that are available that can link the exporter up with potential partners. The Small Business Development Centers that have international trade programs will often do customized distributor research. So, we work with many clients, get a very specific idea from them which countries they want to do business in as well as what types of distributors they want to find and we will go out and do customized research for them and a lot of SBDCs offer that service.

Also, different states have trade offices. Many of these offices have overseas posts as well so you’ll have overseas representatives representing certain states overseas and so you have some in-country assistance that can find the right partners. Also, the U.S. Department of Commerce has these similar services, they have their network of U.S. Export Assistance Centers here in the U.S. but they also have a network of overseas specialists located in countries throughout the world who can do customized research. So they have two services in this area: one is called International Partner Search which is really where they would provide a list of potential partners that have expressed an interest in working with a small business exporter but they also have what they call their Gold Key Service where a small business can go overseas and actually have an itinerary set-up of appointments with potential partners. And both states and the Commerce Department also organize trade promotional activities, things like trade missions and trade shows that often provide an opportunity for exporters to meet with potential partners.

So, really, exporters should use as many of these resources as possible because they are either free or low-cost and government resources, when they’re combined with an exporters own efforts, can often provide both quick and targeted results.

 

Ron Johnson: I’d like to thank Paula Murphy, Director of the Massachusetts Export Center, a part of the Massachusetts Small Business Development Center network for taking time today to discuss “Conducting Market Research.” For more information on exporting, go to www.sba.gov/international or www.export.gov. So, until next time this is Ron Johnson with the Small Business Administration, Your Small Business Resource.

 

[End of transcript]

 

U.S. Small Business Administration

Ron Johnson Interview with John Joyce

 

Ron Johnson: The U.S. Small Business Administration supports small businesses with a variety of programs and services for those companies ready to take their business global.

Hi, I’m Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource and my guest today is, once again, John Joyce, one of 18 SBA Export, Finance and Trade managers across the country who help small businesses grow through exporting. John, it’s good to have you on the program again.

 

John Joyce: Thank you, Ron. It’s good to be here.

 

Ron Johnson: John, many small businesses think that exporting is too complicated. Now, where should an entrepreneur start who’s interested in learning about exporting?

 

John Joyce: Well, I think that a good start is to contact the local office of the U.S. Export Assistance Centers around the country, which are a combination of the U.S. Small Business Administration, the Commerce Department and, in some cases the Export-Import Bank. They are located on our website which is www.sba.gov/international. There is also a free online introductory course on exporting at www.sba.gov/training. And when a company contacts our offices through the Export

Assistance Centers, they will be able to find out about other resources that are available, including the federal government resources, in their area.

 

Ron Johnson: Now, as an SBA Finance and Trade manager, how do you help small businesses?

 

John Joyce: Well, we have a network of offices around the country. There are 18 locations at this time which are expected to be expanded in the near future and we work with companies one-on-one. We meet with the company individually to help them and the SBA’s emphasis is in the area of financial assistance so we try to help them understand how they can utilize the resources that we have in order to increase their export business. We also help to put them in touch with other export assistance programs such as the U.S. Department of Commerce or their local Small Business Development Center and SCORE.

 

Ron Johnson: John, for many small businesses, financing is the key. What types of export finance programs does SBA offer?

 

John Joyce: Well, we have two primary loan guarantee programs. We also work on general export development and helping companies understand other aspects of, for instance, letters of credit and terms of payment that they would need to know. But the two primary programs that we have are our loan guarantee programs that we work with lending banks to deliver.

 

Ron Johnson: What are some of those features of the loan program?

John Joyce: The first program is called the Export Working Capital Program and it is an export line of credit and is used primarily to cover the cost of filling export orders. That means that a company, when they receive an export order from an overseas customer, they can draw against the line and cover 100 percent of their cost of labor and materials and overhead upfront and help them get that order out the door.

When the payment comes in from the customer in the form of a receivable, the payment is put against the line to pay it down so that they don’t develop a balance on the line and they can reuse it for the next order. So it revolves in that way. So the main benefit is pre-export financing, getting the product out the door or delivering a service.

The second program is for smaller loans but it is more flexible in its use of funds. It’s called the Export Express Program. This is very streamlined. The bank, the lending bank uses all their own documentation and so it’s very quickly put into place. It can be up to $250,000. And when I said it’s more flexible, what I mean is it could be used for anything that is going to help a company increase their international business. It might be that it is financing a specific sale but it might be for marketing expenses, for developing brochures or

user’s manuals or even websites that are targeted for international business. And although it has a smaller amount -- and, as a matter of fact, it can be combined with an Export Working Capital line of credit to give the company the flexibility to use it for marketing, international travel or whatever and then have the larger loan available to cover the cost of delivering the product.

 

Ron Johnson: John, one final thing. Where can our listeners go to get more information on SBA’s exporting loan programs or to contact an Export Finance and Trade manager?

 

John Joyce: Our listeners should contact or go through our website. The website is www.sba.gov/international and you can find a listing of our offices, they are called or referred to as U.S. Export Assistance Centers, all around the country and there is also a detailed description of each of our products.

 

Ron Johnson: I’d like to thank John Joyce for being with us today. Make sure you tune in to Part VI of this series and we’ll talk to Andy Kruse, SBA’s 2009 Exporter of the Year and get his perspective on exporting. And if you’re considering taking your business global, SBA is ready to help you succeed. This is Ron Johnson with the SBA, Your Small Business Resource.

 

[End of transcript]

 

U.S. Small Business Administration

Ron Johnson Interview with Andy Kruse

 

Ron Johnson: Many small businesses think they aren’t large enough to compete in the world marketplace. Well in fact, 97 percent of all the exporters are small businesses. To grow your business you need to think outside the box and outside of the U.S. borders.

Hi, I am Ron Johnson with the U.S. Small Business Administration, Your Small Business Network. And we’re talking today about small business exporting and with us today is Andy Kruse, Executive Vice President for Business Development at Southwest Windpower located in Flagstaff, Arizona. Southwest Windpower recognizes the potential for worldwide distribution of wind generators when it began producing battery charged small wind generators in 1987. Today it exports to more than 120 countries. In 2009, Southwest Windpower was recognized as SBA’s National Exporter of the Year during the National Small Business Week.

Hi Andy, it’s good to have you with the program.

 

Andy Kruse: It’s my pleasure. I am happy to be here.

 

Ron Johnson: Now Andy, exporting is getting a lot of attention with the President’s National Export Initiative. But you’re an experienced exporter and I have heard you say, looking

into where your customers are located made you interested in exporting. Tell us about that.

 

Andy Kruse: Well, sure. You know, we started Southwest Windpower back in 1987 and this is the time when our market, our industry was really on the decline. And really a lot of it started out, out of desperation and to try to keep our start-up business going. We saw that the market wasn’t very large for our small wind generators here in the United States so immediately I thought, well, the world’s a big place and why not start looking elsewhere as well and try to find opportunities there.

 

Ron Johnson: Some small businesses may be concerned about language or cultural barriers. Now Andy, how did you overcome these challenges.

 

Andy Kruse: Language barriers are not an issue really. Most people, especially in the business world, recognize that English is the international language and communication has never been a problem. I mean, I’ve travelled to some 70 countries and only in maybe two or three instances where I was in a situation where it would have been nice to have known that language. It’s really just about knowing the right people and if you’re going to export to somebody there -- it’s one of these requirements I’ve always had to say, to be able to speak English with us.

 

Ron Johnson: Now Andy, financing an export program presents different challenges than financing a domestic business. Can you explain to us how you were able to use SBA’s Export Working Capital Program to finance your exports.

 

Andy Kruse: Well, we used a number of programs and SBA was essential -- we were able to demonstrate that here are orders that we have coming in and we just don’t have the capital in order to buy the inventory and to be able to finance the business internally in order to fulfill those orders and just demonstrated that, hey, have something here that is viable; we’ve got an opportunity. We made it very easy. And we used other agencies within the government to help us with the other side later on, like the Export-Import Bank, to actually finance to the actual customer. We have line of credits for our customers overseas as well. So it helped us be assured that we’re also going to be reimbursed.

 

Ron Johnson: What techniques did you use Andy, in the beginning, to market your product overseas and how do you market today?

 

Andy Kruse: A lot of how we market today is not much unlike how we did it back in the late 80’s with the exception of course of the web and various types of banner ads and things like that that are offered. In the early days, it was the fax machine. We began with searching out in different markets who might want to buy our products. We tried to get to understand the customer. Specifically our products are sold in a number of different areas, for example, sailboats, or telecommunication systems, or offshore platforms or remote homes. And we looked for the companies that would best fulfill our needs for those particular customers. So we used -- for example in the Commerce Department area there’s the Gold Key programs that they offer to help you find people there. SBA is the one that was so critical to us, just learning about this stuff.

 

Ron Johnson: And finally Andy, what is the best thing about taking your business global?

 

Andy Kruse: Diversification. You are -- all of a sudden you’re not held to one particular downturn of a market, say, just in the United States. Right now, for example, Australia is on fire, we see that the concerns that we have here in the U.S. still we’re trying to pull ourselves out of a very deep recession. We have even some global concerns over in Australia or over in Europe, but Australia and Asia Pacific regions are doing very well economically so that was what we target so it’s all about diversifying your markets in order to help balance out your sales.

 

Ron Johnson: I’d like to thank Andy Kruse of Southwest Windpower for sharing his exporting success story. If you like more information on exporting go to www.sba.gov/international or

www.export.gov. Until next time, this is Ron Johnson with the U.S. Small Business Administration, Your Small Business Resource.

 

[End of transcript]