‘Go Global’ workshop shares free help available for exporters
A Palmer hay grower has teamed up with a timothy hay farmer in eastern Washington to sell to customers in Japan and South Korea.
It’s a good export business for both small-scale farmers. The eastern Washington farmer had already invested in fumigation equipment, which is required to get rid of field pests like beetles and other live insects prior to shipment. He held licensing required to export agriculture and foreign trade compliance paperwork.
A $150,000 loan for the fumigation equipment was made to the Washington farmer through an international trade loan, said Lee Gibbs, the export finance manager for Alaska, Washington and North Idaho at the U.S. Small Business Administration Office of International Trade.
This is one story of a matchup that expanded partnerships for both hay growers and provided an example for how it’s done in a seminar, “Go Global” presented by the Alaska Small Business Administration office.
Along with Gibbs, presenters were Debbie Franklin, the director of the U.S. Commercial Service-Alaska and Jon Bittner, executive director of the Alaska Small Business Development Center, who spoke about the Export-Import Bank of the U.S., or EXIM.
The workshop gave pointers to about 20 attendees on the free technical services available by the three entities that often work in a partnership to get businesses ready to export.
“We don’t get that many phone calls and that is why we are getting these workshops available to get out the word that there are resources available to help them start,” said workshop organizer and Alaska SBA lender relations specialist Nelida Irvine.
“But I know of small businesses who are ready. A typical one would be the peony growers. We have 200 growers in Alaska now and they are ready.”
A lot of small businesses could be exporting, but are afraid of the cultural, language and political barriers, she said.
The big exporters in seafood and oil and gas have long engaged in international trade, Irvine noted, “but the small ones are still hesitating.”
While Gov. Bill Walker and 24 Alaska businesses on a trade mission to China this week hope to open more trade opportunities, eyes are on the big trade partnerships that provide $4.9 billion to Alaska largely for seafood and minerals. Also on the trade mission are small entrepreneurs such as SBA clients 49th State Brewing Co. and Bambino Baby Foods.
The later two are examples of another market of small and medium-sized enterprises that account for 71 percent of all Alaska goods exporters, Franklin said.
Alaska’s top five export markets are China, Japan, Canada, Korea and Germany, in that order and a total of 589 companies exported from Alaska locations in 2015.
In the farmers’ partnership example, Gibbs said he didn’t have permission to use the actual names. But such business “matchmaking” allows for people to connect with partners who already know the ropes about compliance issues on their particular export commodity.
““It’s not so much what you know as who you know and that couldn’t be more true in this area,” he told an audience that extended around the state via Webinars.
Another piece of advice is to broaden what is considered an “export.”
“Follow the money,” Gibbs said. “If the money comes from outside the U.S., then it is an export.”
Alaska tourism businesses such as hotels, bed and breakfasts and guide operations that reach out to foreign customers are “exporters,” Gibbs said. Schools that seek foreign students are exporters. Offering services such as technical support to foreign customers is exporting.
As an exporter of Alaska goods or services, lots of questions also arise such as how to navigate through the paperwork, language and cultural barriers, accepting foreign payments and getting loans to expand the business.
At the Go Global workshop, the experts cautioned attendees to consider the first steps in any business plan: strategy and logistics.
How to process payments is also a first step for consideration, Bittner said.
Three ways of selling overseas are via cash in advance, accepting letters of credit and keeping an open account.
“The open account is the most common, with 85 percent of world trade done on open accounts,” Bittner said. “Another 15 percent accept on secure payments.”
The open account — payment received after goods were shipped — carries the most risk but with export insurance, supplied through EXIM, the risk is greatly reduced, Bittner said.
Franklin emphasized that all of these arrangements need to be made before the first trade agreement takes place. There’s also a vetting process that needs to occur with a prospective business.
Bittner talked about the safety net in export credit insurance from the EXIM, which is actually a federal agency, not a bank.
This is a tool that is routinely used to insure foreign orders against nonpayment, offing up to 95 percent protection. There are also international trade loans up to $5 million to improve the competitive position of a business that is expanding or developing foreign markets.
Gibbs, as an export finance manager, helps connect small businesses to loans and trade counseling.
The free services include help finding the best international markets for a company. Trade counseling helps people develop an effective market entry and sales strategy. They also help navigate U.S. government export controls and compliance. There’s help in business matchmaking, Gibbs noted, and expertise to analyze market potential and foreign competitors.
Some countries are illegal for U.S. imports or there are sanctions on certain products, such as in trade with Russia, North Korea and Cuba, noted Franklin, who opened the first International Trade Center in Iowa 15 years ago prior to taking the Alaska post in 2015.
Given that all this information is free, it bothers Gibbs — who has 38 years experience in agricultural, commercial and SBA lending — when he is visited by professional consultants on behalf of businesses.
“They come and get all this free information from me, then go back and charge the client for it,” Gibbs said. “I wonder why didn’t the client come to us to begin with?”
Naomi Klouda can be reached at [email protected].