the entrepreneur's guidebook

You may be a few minor challenges away from doing business internationally. take it from these global thinkers who’ve reaped rewards for venturing out of their comfort zone.

The wall behind the desk of VO2 Maxed president Sean O’Malley is draped with the largest world map he could find. It is sectioned in eight panels, each four feet wide by six feet tall. He purchased it after his now four-year-old Virginia Beach, Va., company first shipped its product internationally—in 2004 to an American soldier stationed in the Sinai Desert. The map helps him keep in perspective the global sales of his Cardio Coach, an audio-guided workout series available as MP3 downloads and on CD.

“[The overseas sale] piqued my interest as to where the Sinai Desert was, and that was when I first became aware of life outside of the U.S.,” says O’Malley.

Going global may have caught O’Malley off-guard, but it is not unusual for a small- or medium-sized enterprise (SME) to do business overseas, either through sales or hired workers. According to the Office of United States Trade Representative (OUSTR, ustr.gov), 97 percent of all American exporters are SMEs. And that’s a smart move. Whether a company accidentally becomes global, like O’Malley’s, or built its business plan with the goal in mind, experts say that going international is a great way to increase your customer base. According to OUSTR, 95 percent of the world’s consumers live outside the United States, so if a U.S. business only sells domestically, it reaches just a tiny share of its potential customers.

More and more savvy business executives have been increasing their company revenues by reaching out to overseas markets each year, according to Export.gov, a government Web site managed by the U.S. Department of Commerce’s International Trade Administration in an effort to assist American businesses in planning their international sales strategies. It reports that U.S. merchandise exports grew 13 percent in 2004 and 11 percent in 2005.

“Yet despite this good news, we should ask ourselves if the United States could be doing even better in a growing global economy,” says Franklin Lavin, the undersecretary of commerce for international trade, who in April spoke on this topic before the House Small Business Committee. “While the dollar volume of merchandise exports from SMEs has risen by more than 16 percent [between 1997 and 2004], the share of U.S. merchandise exports [based on sales] by SMEs has remained around 30 percent.”

While there are a number of explanations for these trends, a number of surveyed companies cited “better market prospects here in the U.S.” as a reason they haven’t decided to export, Lavin says. “So the challenge for us is to encourage more U.S. small and medium-sized companies to take advantage of improved ease of access to foreign markets and improved opportunities in a growing world economy.” Depending on what a small business sells, that could be a fairly easy process.

Not long after the Sinai soldier purchased cardio workout tapes from VO2 Maxed, an order arrived from Brantford, Ontario, followed by a stream of additional orders from Canada. Just a few weeks later, orders came in from Australia, New Zealand and Saarbrücken, Germany. Then, on September 9, 2004, a customer from Plumstead, London, placed an MP3 order.

“I remember sitting at my desk when the order came in, as the slightest glimmer of a thought entered my mind that Cardio Coach had just traveled through cyberspace as an MP3 download across the globe,” says O’Malley. Just six days later, an order came in from a customer in Bolivia. The company now has an overseas sales strategy and sells in 66 countries, with 12 percent of orders derived from overseas sales. “We have to pass on the shipping costs to customers, but they don’t seem to mind,” said O’Malley, who mentions that one person’s order to South Africa cost $19 for global priority shipping and it took almost two months for her to receive that order due to customs. It would have cost $4.05 to ship in the U.S.

Companies looking to sell products overseas should be aware that there can be shipping delays with international orders, and they also must contend with customs and duty taxes.

Cynthia McKay, CEO of Le Gourmet Gift Basket in Castle Rock, Colo., knows shipping hazards all too well from processing overseas orders for baskets of gourmet food, coffee, tea and spa items. But that was the least of her problems when her now 14-year-old company began to woo international clients via strategically placed newspaper and magazine ads three years ago. “Unfortunately, my initial sale was in Montreal, where the law required all advertising and promotional materials both for myself and my new buyer be in French and English,” she says. “The deal cost a great deal of time and money.”

When McKay ventured into countries with drastically different cultures and languages, the opportunities became even more challenging. “I managed to offend individuals in Japan, the Philippines and Australia by being unfamiliar with customs and business practices. I learned that business offerings can be confused by semantics, and that contracts may be interpreted much differently than intended,” she said. “I also found that sending a man to Japan instead of myself would have been a better bet, as the men preferred to do business in gentlemen’s clubs.”

Despite the hurdles, McKay now has 510 distributors serving her clients, 90 of them outside of the U.S.—from large corporations like Coors and hotel chains, all the way to individual doctors or real estate agents needing small gifts for particular occasions or employee recognitions. Globally, sales of her products have increased by 32 percent in three years.

But being global stretches beyond your sales ledger. Hiring overseas employees or outsourcing can also be beneficial to the growth of a business. Xpitax, a Braintree, Mass., company that helps accounting firms outsource some of their tax preparation needs, went global from day one, says CEO Mark Albrecht, who adds that, “Xpitax would not exist if we did not have a relationship with chartered accountants in India.”

Maintaining a year-round team of qualified CPAs in the U.S. just to help push paper during tax season would be both cost-prohibitive and impossible due to the seasonality of the industry, Albrecht says, so some firms turn to Xpitax when they need help during crunch time. Prior to that, “CPA firms in the U.S. have either burned staff out and had high turnover, or [they] turned away work, resulting in lost profits,” he says. Xpitax, with nearly 500 accountants on the case in India, have, in a way, made every small accounting firm that utilizes their services into a global company as well. “Outsourcing provides young companies with a good idea, to get up and run with a lower capital investment. The result is more new, successful companies, which are creating jobs overseas and domestically,” Albrecht adds.

Small firms also foster competition by entering global markets, says Peter Rodriguez, an associate professor of global economies and markets at the University of Virginia’s Darden School of Business. “Done carefully, going global can deliver benefits at home by casting fresh perspectives on old ways of doing business.”

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sheree r. curry is a freelance writer based in Minneapolis. Email Sheree at editor@executivetravelmag.com.