When Karl Halpert heard that 95 percent of the world’s consumers live outside of the United States, he knew it was time to take his New Mexico-based small business global.
As the president and CEO of Private Label Select — a manufacturer of lip balms and other personal care products — Halpert said the initial thought of international expansion seemed overwhelming, but the allure of tapping into such a large market was too good of an opportunity to pass up.
“It was definitely daunting at first, but once I got on an airplane and met with people, I realized it is about developing relationships,” Halpert told BusinessNewsDaily, “which is not dissimilar from what goes on domestically.”
Today, four years after starting the process, Halpert is selling his products in countries all over the world, including the United Kingdom, Taiwan, Japan and China.
Just this month, Private Label Select, which has about 25 employees, signed agreements with new overseas distributors that could bring in as much as $70,000 in income this year alone.
“'Made in the USA') holds great cachet throughout the world,” Halpert said.
Halpert is far from alone when it comes to expanding his small business internationally.
According to the International Trade Administration, 281,668 businesses with fewer than 500 employees exported from the United States in 2008, accounting for 97.5 percent of all U.S. exporters.
But before deciding to go global, business owners need to carefully examine if their company is ready for such a step, said Bob Pirtle, president and CEO of International Expansion Experts.
“Everybody loves the romance of going international,” he said. “But they don’t think of how challenging it is going to be.”
Factors to consider include whether your product has appeal overseas, how you will get it there, how you will get your money from the sales and whether you have the right managers in place to handle that international aspect of the business, Pirtle said.
“It takes a big commitment to go international,” Pirtle said. “Both in manpower and money.”
Doug Schust owns a WSI Internet marketing services franchise in Waterloo, Ontario. A franchise owner since 1997, Schust always planned on expanding globally, and got the opportunity to do so three years ago in Ecuador.
The move has been a successful one, with Schust recently landing a seven-figure account with Metropolitan Touring, a travel company based in Ecuador.
Reaching this point, though, has been a long process, Schust said, noting it took two years to get the Ecuadorian franchise running as smoothly as the one in Canada.
“The speed in which we all move is a little different,” Schust said of working in different countries. “To get everyone on the same page was a bit of a transition.”
Halpert agreed that business owners must be willing to be patient.
“It can easily take two to three years to develop a good relationship” internationally, he said. “You have to be willing to invest that time.”
Not all aspects of Halpert's international expansion have been smooth sailing.
When they first began, Halpert said paperwork errors and a lack of proper insurance cost the company a lot of money after the buyer refused to pay for the shipment of their products.
“Those are the things you hopefully only have to learn once,” he said.
Learning the culture of the countries in which you hope to expand is also important, Halpert said. Little things, like knowing how business cards are exchanged or who sits where at a dinner meeting, can make a big difference.
"It is important to educate yourself,” he said. "I think it gives you a leg up."
Despite all the challenges, Pirtle said the payoff of international expansion can be very rewarding if done right.
“Being able to promote yourself as an international business has sex appeal to a small business owner,” he said. “It puts them in a different league.”
Going global, Pirtle said, also gives small business owners the opportunity to unload excess inventory, take advantage of various tax breaks and offset the negative effects of inflation by not relying solely on the ups and downs of one country’s economy.
Schust said his overseas expansion has gone so well that he is opening new WSI franchises in both the United States and United Kingdom in the next few months.
“It has been one of the most beneficial things I have done in my life,” he said. “It has really allowed us to do things we wouldn’t have been able to before.”
To help get Private Label Select’s overseas expansion started, Halpert worked with the New Mexico Economic Development Department, and he encourages others to work with their own local and state agencies as well.
“There are lots of resources out there to help small companies begin the process,” he said.