TRADE ROAD MAP - FedEx

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TRADE ROAD MAP

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In recent years, exporting activity has grown among small- to medium-size businesses. It’s easy to see why: 96% of the world’s consumers live outside the U.S., according to the U.S. Small Business Administration. Plus, the cost of doing business internationally has never been lower, thanks to today’s technological advancements and Free Trade Agreements.Everybody wants a piece of the global marketplace. The question is: Why should you export? Every business is different, but here are a few reasons you might want to take your business to a new place. You can:

Why should you export

• Tap a larger customer base

• Gain more revenue

• Increase profit margins

• Grow your brand exposure

• Beat your competition to a new market

• Balance out seasonal sales spikes

• Increase market share

• Find tax advantages

• Create jobs

• Meet the high demand of a community in need

• Increase return on investment

• Extend life cycle of technology

Before you dive headfirst into the exporting game, you need to make sure you’re ready. Starting out on the right foot can make all the difference in the world, and we can help. This road map is designed to simplify your exporting journey and provide you with resources that can make your life easier.

Be a successful exporter

Determine pricing

Choose a payment method

Identify your buyers

Develop after-sales support

Move your product

Keep your plan running smoothly

Build your business plan

Get ready to go global

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• Doing due diligence

• Being willing to alter products for market acceptance

• Grasping cultural differences

• Understanding the value of relationships

• Accepting diversity

• Having an exportable product

• Having capacity to support additional sales

• Being financially stable

What makes a successful exporter? Be a successful exporter

Why should you export

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Determine pricing




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There are several ways to assess your company’s export potential. For a more objective answer, you can take this quick assessment. Once you’re finished, you will receive a score that represents your readiness to export. You’ll also be provided with resources that can help you bolster any areas of opportunity. Answering the following questions will help you determine if your company is ready to export:

• What does your company want to gain from exporting?

• Is exporting consistent with other company goals?

• What demands will exporting place on your company’s key resources, management and personnel, production capacity, and financing?

• How will you meet these new demands?

• Are the expected benefits worth the costs, or would company resources be better used for developing new domestic business?

For a more in-depth list of things to consider before you take your business across borders, read these Exporting Basics.

Assess your company’s export potential

Get started Assess your product

https://www.export.gov/article?id=Why-Companies-should-export

https://exportingpa.org/Assessment.aspx

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Assess your product If you’re selling domestically, it’s likely that you’ll be able to find a similar market with similar needs abroad — especially if your product or service has unique features that are difficult for international competitors to duplicate. Export preparation resources

FedEx Know and GrowSM

Export.gov

U.S. Commercial Service

Export-Import Bank of the United States

U.S. Small Business Administration

Assess your product

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Get started Assess your product

https://smallbusiness.fedex.com/international/export-education.html

http://www.export.gov/index.asp

http://www.trade.gov/cs/

http://www.exim.gov

https://www.sba.gov/exportbusinessplanner

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Creating an effective export plan is the most important step you’ll make toward export success. So what goes into an export plan?• Executive summary

• Export policy commitment

• Background analysis

• Market analysis and strategy implementation

• Financial analysis

• Logistics — mode of transportation, speed, rate quotes, etc.

At first, it’s important to keep your export plan simple — no more than a few pages. You should update it as you learn more about exporting in the specific market you’re entering. Gaining experience and expertise will help you generate a more detailed, precise plan.


Get started Find finance help Discover resources

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1. Which products have you selected for export development, and what modifications, if any, must be made to adapt them to new markets?

2. Which countries are targeted for sales development?

3. In each country, what are the basic customer profiles, and what marketing and distribution channels should be used to reach potential customers?

4. What special challenges pertain to each market (for example: competition, cultural differences, import controls), and what strategy will be used to address them?

5. How will the export sales price of each product be determined?

6. What specific operational steps must be taken and when?

7. What personnel and company resources will be dedicated to exporting?

8. What will be the cost in time and money for each product exported?

9. How will results be evaluated and used to modify the plan?

Nine questions to get you started


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In a survey of 460 self-funded startups, 42% cited a lack of capital as the biggest obstacle to growth. It’s difficult to grow — especially overseas — without the proper funding. Luckily, there are plenty of ways to finance your export plan. You just have to know where to look. Consider working with:• Commercial banks

• Export intermediaries

• Government assistance programs

• Multicultural development banks

• Local export finance programs

Here, you’ll find more information and resources for each of the options above.

Get help with financing


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http://www.export.gov/index.asp

http://www.wsj.com/articles/bootstrapped-startups-risk-lack-of-connections-1423096620?mod=WSJ_hpp_sections_smallbusiness

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Export University: Export 101TM

ExporTechTM: An Export Acceleration System for Achieving Profitable Growth

Mentoring from your local District Export Council

What other resources can help me?


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http://districtexportcouncil.org

http://www.exportuniversity.com

http://www.nist.gov/exportech/index.cfm

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Plotting your expansion involves plotting your price points. Having a better idea of how much your product costs the consumer will come in handy during conversations with potential investors and distributors.

Determine pricing

Pricing steps Business model Direct export Indirect export Incoterms®

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• Determine your objective in the foreign market.

• Compute the actual cost of the export product.

• Compute the final consumer price.

• Evaluate market demand and competition.

• Consider modifying the product to reduce the export price.

• Include “non-market” costs, such as tariffs, customs fees, etc. - FedEx® Global Trade Manager can help you calculate duties and taxes.

• Exclude cost elements that provide no benefit to the export function, such as domestic advertising.

• Identify the Incoterms applicable to the transaction.

• Calculate your profit margin after considering all of the above.

Prepare for your price point to differ, based upon order volumes and the particular country. Whether you sell directly to a consumer, or wholesale to a distributor, will also be a factor.

Evaluate your product’s price point to determine competitiveness, keeping in mind that overall quality and current product models are important around the globe. But it’s also important to remember that markets struggling for access to goods may be very receptive to prior year models for attractive prices.

Looking for help pricing your exports?

Key steps to help you determine pricing


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https://www.export.gov/article?id=Incoterms-ecommerce

https://www.fedex.com/GTM?cntry_code=us

http://export.gov/basicguide/eg_main_085586.asp

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When considering cost, it’s critical to choose a business model that aligns with your logistics needs. This is the time to decide whether you will export directly or indirectly. Things you’ll want to consider before making the decision:• The size of your firm

• Tolerance for risk

• Resources available to develop the market

• The nature of your products

• Previous export experience and expertise

• Business conditions in the selected overseas markets

Choosing the right business model


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When you export directly, your company handles every step of the exporting process, from market research to foreign distribution and payment collections. However, if your business is ready to take on those responsibilities, then direct exporting can help you maximize profits and growth in the long run.

You can find assistance with this process. The U.S. Commercial Service is a federal agency with many local offices, and plenty of state economic development offices provide export help as well. In addition, organizations such as SCORE and World Trade Club will support you at the local level.

Exporting directly


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http://www.export.gov

https://www.score.org

http://www.worldtradeclub.net

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Indirect exporting may be the best choice for smaller U.S. companies. Using an intermediary reduces many potential risks and complexities. An intermediary assumes responsibility for finding international buyers, shipping products, and collecting payment.They typically charge an annual fee, plus either expenses or commission for promoting your product. Some intermediaries buy your product at a discount and then resell it.

There are several types of intermediaries, and each one offers your business different advantages. These are a few you may work with:

• Confirming houses

• Export management companies

• Export trading companies

• Export agents, merchants, or remarketers

A Basic Guide to Exporting has loads of information on direct and indirect exporting — including in-depth descriptions of each of the above intermediaries.

Exporting indirectly


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http://export.gov/basicguide/?utm_source=hero&utm_medium=exportgov&utm_campaign=basicguide

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Incoterms are a set of rules published by the International Chamber of Commerce that clarify the responsibilities of importers and exporters under sales contracts. In addition, Incoterms apportion the transportation costs associated with the delivery of global goods, so you can more accurately predict potential pricing.Flexibility is important when working with multiple buyers from multiple countries. Incoterms used for one transaction may not be the best choice for the next transaction. The key is to negotiate the term up-front, so you can price the product correctly and protect your profit margin. Your banker or financial team member may want to discuss due diligence on this topic.

Use Incoterms® to estimate costs


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https://www.export.gov/article?id=Incoterms-ecommerce

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So you’re getting past the planning phase. Now it’s time to find qualified buyers in the market you’ve chosen. You’re in luck. There are plenty of resources and services for businesses in this exact position. And you should take all the help you can get. You’ll have more time to focus on what you love: growing your business.

The Gold Key Matching Service (GKMS) Allows the U.S. Commercial Service to arrange meetings with pre-screened contacts, distributors, professional associations, government contacts, and/or licensing or joint venture partners.

International Partner Search (IPS) Based on your marketing materials and background information, trade specialists in more than 80 countries will find the most suitable and strategic partners for your business.

Whether or not you use a matching service, you can find potential buyers by conducting your own market research. Use this “Step-by-Step Approach to Market Research” as a starting point.

For more information about the GKMS, IPS, and other partner services, contact your local U.S. Commercial Service office.

Who not to do business with

Use FedEx Global Trade Manager to screen for denied parties: individuals, companies, and other parties that have been denied international business transactions.


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https://www.export.gov/Finding-Foreign-Markets

https://www.export.gov/Promote-and-Expand

https://www.export.gov/Promote-and-Expand


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Once you find your buyers, you’ll have to decide whether your product needs to be modified somehow before you ship. For example, do you need to rebrand the product to appeal to your target audience in this new market? In addition to adapting your product for cultural or consumer preference reasons, there may be foreign government regulations that can impede market penetration. These types of regulations are usually put in place to:

• Protect domestic industries from foreign competition

• Protect the health and safety of citizens

• Force importers to comply with environmental controls

• Ensure that importers meet local requirements for electrical or measurement systems

• Restrict the flow of goods originating in or having components from certain countries

• Protect citizens from cultural influences deemed inappropriate

Whatever the reason for the regulations, it’s essential to make sure your market potential is high enough to warrant any changes to your product, strategy, or overall costs. For assistance dealing with specific regulations in your country of interest, contact the Office of the U.S. Trade Representative.

Preparing your product for export

Export preparation Rules and regulations Customs Harmonized codes Service options

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https://ustr.gov

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Every country will have different rules and regulations. Here are a few things to get familiar with before you ship to a new country:• Standards (CE marks, etc.)

• Intellectual property protection (for logos, etc.)

• Tax laws

• Export compliance

• Quotas (applies to textiles)

• Tariff rates

• Product packaging

Learn what it takes to ship to the new market

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https://www.export.gov/article?id=Intellectual-Property

http://www.export.gov/cemark/eg_main_017268.asp

www.bis.doc.gov


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Dealing with documentation can make exporting seem like a challenge. But FedEx can help you every step of the way, from finding the right documents to preparing them accurately.

FedEx Global Trade Manager At the FedEx Document Preparation Center, you can find which international documents you’ll need and save the ones you use most. Taking care of everything online can save you a significant amount of time now — and even more time in the future. Plus, there’s less room for error.

FedEx® Electronic Trade Documents Eliminate the need for multiple copies and multiple steps. FedEx Electronic Trade Documents allows you to upload, organize, and customize your international documents, which can greatly simplify customs clearance.

International Document Assistance This article provides you with in-depth resources to help you tackle three of the most important parts of international documentation: gathering the right information, determining the correct documents, and completing documents accurately.

Paperwork accuracy Learn how accurate paperwork can keep your costs down and your customers happy. You’ll also see some of the most common documents a successful exporter will need.

Clearing customs

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https://smallbusiness.fedex.com/international/documents/electronic/start.html

https://smallbusiness.fedex.com/international/documents.html

https://smallbusiness.fedex.com/customs-confidence.html

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In the Harmonized System, six-digit codes represent general categories of goods. This system is recognized by 179 countries, customs bureaus, or economic unions, which represents 98% of world trade.The system ensures that customs officials are referring to the same item when applying tariff rates, etc.

Use FedEx Global Trade Manager to search the Harmonized System for codes that apply to your products.

Harmonized codes

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Speed? Cost-effective shipping options? Packages? Freight? These charts will help you find the perfect service for your schedule and your budget:• Shipping with FedEx Express

• Shipping to Canada

• Consult with a FedEx expert

Profit from proper packagingTo save on shipping, it’s important to protect your shipment while at the same time maintaining a relatively low dimensional weight.

Learn how dimensional weight pricing rewards shippers who pack properly.

Flexible services to fit your business needs

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https://smallbusiness.fedex.com/content/dam/SMB/international/pdf/International%20Shipping%20Infographic.pdf

https://smallbusiness.fedex.com/content/dam/SMB/general/pdf/FedEx_Ship_To_Canada_Solutions.pdf

https://smallbusiness.fedex.com/form-sales-consult.html

https://smallbusiness.fedex.com/manage-shipping-costs/pack-to-profit.html

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There are plenty of different ways to receive payment from your international customers, and the option you choose will have a lot to do with your business model.Starting with the most secure option for the exporter, these are the basic methods of payment:

• Cash in advance

• Documentary letter of credit

• Documentary collection or draft

• Open account

• Other payment mechanisms

Learn more about each of these options.

Methods of payment

Payments barriers

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http://export.gov/basicguide/eg_main_085586.asp

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Foreign currency The U.S. dollar is widely accepted, but you may have to deal with foreign currency, depending on your buyer. A simple way for you to avoid any issues with foreign currency is to always quote your prices in U.S. dollars. That places the burden of conversion on the buyer.

Mitigating risk with credit insuranceWhat to consider when evaluating credit insurance:

• Flexibility - Allows for open account sales - Opens sales opportunities in new markets - Extends payment terms - Insures payment of delinquent accounts

• Public vs. private insurance

• Increased potential financing options

Paperless payment makes your life easier Go paperless to do better business. FedEx® Billing Online helps provide visibility of any international billing issues and an opportunity to quickly resolve them. You’ll have total transparency and control, so you know exactly what went where and how much it cost. Plus, you can customize your invoicing data, tailoring it to your company’s every requirement.

Payment barriers

Payments barriers

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http://www.fedex.com/us/fcl/pckgenvlp/online-billing/billing.html

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Customer satisfaction is your most important currency. In order to stockpile it, you’ll need a clear plan for returns and other after-sales support.Here are some questions you can ask yourself in order to ensure you have a comprehensive after-sales support plan.

• Does your product come with a warranty for repairs? If so, where will the repairs be done and who will do them?

• What is your return policy for order replacement in the event of ordering errors?

• Is the value of your product high enough to warrant the cost of returning and replacing? Or is a quick replacement a more customer-friendly option that will ensure satisfaction?

After-sales support

Returns FedEx® Global Returns

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A pleasant return experience is a huge part of keeping customers happy. However, maintaining a smooth return process can seem overwhelming — especially when you’re shipping to and from another country. But it doesn’t have to be difficult. So what are your options if a return is necessary?

Requiring the buyer to return the product. Consider this option carefully. It is the highest-cost option — for you and your customer. Plus, your customer will lose the use of the product during the entire process.

If the product is low-cost, then you can always simply replace it. The importer doesn’t incur a cost, and you don’t absorb the cost of the return. But what are some other options?

Identify and use a local service facility. The costs of things like planning and training can sometimes be worth it in the long run. If your export venture is successful, you may even consider establishing your own branch or subsidiary in the new market.

Generate happy returns


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With FedEx Global Returns, you get control, flexibility, and customs clearance assistance. • Link your return to an outbound shipment, track its status in transit, and decide when it arrives.

• Choose in which format you send return labels, include labels with return shipments, or create labels for just the return leg.

• Get help navigating key information items required by brokers and customs officials.

Take control with FedEx® Global Returns


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http://www.fedex.com/us/global-returns

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So, you’re a successful exporter now. It’s important to constantly re-evaluate and (if necessary) tweak your plan to maintain this level of success. Here are some things you can do to periodically check up on your plan:

1. Revisit your relationship with your buyers frequently. Relationships are what keep your business in forward motion.

2. Schedule regular product reviews and training for your distributors. They are a reflection of your business, and you need to ensure they remain current on product features.

3. Keep an eye on the success of products like yours. Know where you stand in the competitive landscape.

4. Be flexible with your supply chain options. Be prepared to work with your buyers to meet their specific, perhaps changing, needs.

5. Proactively learn the rules, regulations, license needs, product markings, and required documentation for any new markets you may enter.

6. Assess buyers and identify risks before selling to any new markets, and consider a few sample shipments to test the waters before totally jumping in.

Feel free to revisit this road map anytime you get stuck or want to enter a new market. Creating an export plan for each new market and product line will help your business in the long run, and that’s what this road map was designed for. With these tips, tools, and resources at your disposal, you’ll reach the finish line faster.

And remember to visit FedEx Know and Grow for more learning opportunities.


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https://smallbusiness.fedex.com/international/export-education.html

TRADE ROAD MAP - FedEx

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