Exporting Basics

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In the age of globalization, exporting represents a crucial component to the long-term economic health of the United States and to Oklahoma. As the world gets smaller, markets for products and services continue to expand, representing a variety of opportunities for Oklahoma businesses and communities to increase profits, raise employment levels, fund sustainable economic development initiatives, and attract foreign direct investment (FDI) dollars.

Yet according to the U.S. Small Business Administration's Office of International Trade and the U.S. Department of Commerce, only a small percentage of potential exporters take advantage of these opportunities. As the division between domestic and international markets continues to blur, Oklahoma's businesses--no matter their size--must think globally.

However, making the export decision requires careful assessment of the advantages and disadvantages of expanding into new markets.

Advantages include:

• Enhance domestic competitiveness
• Increase sales and profits
• Gain global market share
• Reduce dependence on existing markets
• Exploit corporate technology and know-how
• Extend the sales potential of existing products
• Stabilize seasonal market fluctuations
• Enhance potential for corporate expansion
• Sell excess production capacity
• Gain information about foreign competition

Disadvantages -- Your business may be required to:

• Develop new promotional materials
• Subordinate short-term profits to long-term gains
• Incur added administrative costs
• Allocate personnel and resources for travel
• Wait longer for payments
• Modify your product or packaging
• Apply for additional financing
• Obtain special export licenses

According to the SBA and U.S. Department of Commerce, these disadvantages may justify a decision to forego exporting at the present time. Key to this decision is your company's current financial situation. If your company's financial situation is weak, attempting to sell into foreign markets may be ill-timed. On the other hand, some companies have been successful selling abroad even before they have made any sales domestically. The following example comes from the SBA's "Breaking into the Trade Game: A Small Business Guide:"

Although there aren't any hard and fast rules for when a company should venture into the global market, success ultimately depends on management commitment and careful and extensive planning.

Management: A Clear, Committed Export Vision
A successful exporting strategy requires commitment from a company's managers--from the Chief Executive Officer to front-line supervisor. According to the U.S. Department of Commerce's publication "A Basic Guide to Exporting," which will be discussed in greater detail later, there are a variety of management issues involved in the export decision. Those include:

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