Going global: How your biz can make the leapMarch 25, 2009: 10:11 AM ET
Ready to expand overseas? Here's a guide to the resources that can help you get started.
Peter Van Wolvelaerd, Scottsdale
My company has been doing business with the U.S. government, and we have been awarded some new business, in no small measure because of our service-disabled veteran-owned status. We have located business opportunities in Europe with the U.S. government and are trying to partner with a European company. Because we don't have assets abroad it is very important we work with a local partner. My question is, what are the rules that the U.S. government has for companies when they partner with others? All of our local assets will have to come from our European partner.
By Kathleen Ryan O'Connor, CNNMoney.com contributing writer
Now that business can be done almost as easily in Dubai as in Dubuque, even small U.S. companies are looking abroad for the next great business opportunity. But how do you go about finding a good international partner? It's all too easy to get caught up in scams and cultural snafus.
Step one: Don't fly blind, says Todd Recknagel, president and CEO of Mr. Handyman International. His company launched in the U.S. in 2001 and has expanded into Canada, the United Kingdom, Ireland, China, Japan and Portugal.
"We work with U.S. Commerce Department's Gold Key program," Recknagel says. That program uses the government's offices overseas to help U.S. businesses find suitable international business partners. Potential partners are pre-screened, a huge leg up for any company - and one that helps weed out scammers.
It's formally called the Gold Key Matching Service, and details about it can be found on its Web site or by calling 1-800-USA-TRADE. The program's network of export and industry specialists are available in more than 100 U.S. cities and 80 countries worldwide to counsel small and midsized U.S. businesses on how to successfully export their products and services. The Commerce Department also offers a Platinum Key service that allows U.S. companies to take advantage of longer-term, more customized assistance.
International corporate attorney Richard Jacobson, of the Tampa law firm Fowler White Boggs Banker, also recommends the services offered by the U.S. Commerce Department. The government charges for its services, usually several thousand dollars or more, but for "the first time exporter, it can be very useful," Jacobson says.
It's also smart to connect with local chambers of commerce in your target country. "In Moscow, the Russian-American Chamber of Commerce is a huge organization, which is good for the language issue," Jacobson says. "You will find someone who will speak English or an American."
As for what not to do: "Say I want to sell widgets to country X and I meet someone," Jacobson says. "They might say, 'call my brother-in-law.' I'm skeptical of those. I'd much rather get a referral. That person may be the best for you, but what are the odds of that?"
As you find local partners, be prepared to be flexible in how you conduct your business. Let the locals be your experts, advises Jim Cornish. He's the co-founder and managing director of Ecowash Mobile, a waterless car wash service that launched in Australia in 2004 and now operates in 12 countries, including the United States. Like Mr. Handyman International, Ecowash Mobile uses a master franchise model that allows for local control.
"There are nuances you can only pick up if you've lived there for a while," Cornish says.
Of course, all the reputable connections you can build overseas won't do much if your underlying business plan isn't sound.
"One of the assessments we did even when the economy was rip-roaring was, what are the fundamentals we can do better here?" Recknagel says of Mr. Handyman's domestic operations.
Overseas expansion is a significant undertaking, one that may not be worth it until you've tapped out all your local growth opportunities. "It's a lot of time, money, investment, and sort of chasing your tail, even, when expanding overseas," Recknagel says.
As for rules about what you can or can't sell, the federal government has export regulations, but for the most part, if what you are selling is legal and within that scope, you should be able to go about finding an international partner without interference.
But be sure to pay your taxes. There's a "cocktail party notion" that if you sell your widgets overseas, you can somehow avoid taxes, attorney Jacobson says. He strongly advises against trying to game the system: "Number one, it's tax fraud, and the IRS rules have been all over that maybe since John Kennedy was president. Tax law is all over that, and it's pretty clear."
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