Small B2B companies looking to grow might want to consider exporting, as two-thirds of the world’s purchasing power is in other lands. And as they grow, so, too, should their need for more labor.
Natale Goriel, an official serving as a moderator for the U.S. Small Business Administration (SBA) community, noted in a recent blog post on the SBA’s website that, through exporting, small businesses have broad opportunity to expand their presence. Today, they already account for 99.7 percent of all U.S. employers and half of the nation’s private workforce, she noted.
Exporting, in fact, is on the minds of many B2B operators. A 2013 SBA survey of 500 small-business owners, Goriel noted, found that 63 percent of participants who did not already export said that they would be interested in doing so. However, they cited a lack of information on exporting as an obstacle to expand sales into other markets.
Such resources, and opportunities, however, are becoming more available, Goriel said. In 2009, for example, President Obama launched the Export Control Reform (ECR) initiative, which is designed to enhance national and economic security through reform of the export control system, which had not been comprehensively updated in decades, she wrote.
ECR affects second- and third-tier small and midsize suppliers in the defense industry. These sectors include aerospace, military vehicles, marine vessels, space, satellites, and electronics, Goriel said.
The Commerce Department’s Bureau of Industry and Security (BIS) administers export controls for commercial and some military commodities and technologies. The president’s ECR initiative is transferring tens of thousands of less sensitive military items from the State Department’s jurisdiction to the more flexible Commerce Department regulations, Goriel noted.
Most are parts and components, with many being manufactured by small businesses, Goriel said. “Moving these items to Commerce benefits small businesses because BIS’s regulations allow for more nuanced distinctions among technologies, destinations and end users than (do the) the State Department’s regulations,” she wrote in the blog post.
The reform initiative helps small B2B vendors by increasing the security of supply from small suppliers, facilitating timely and reliable supplier relationships between U.S. exporters and their foreign customer base and enhancing their long-term health and competitiveness, Goriel said.
Currently, exporters subject to the State Department’s International Traffic in Arms Regulations (ITAR) pay $250 per license to the department, even to export an item that sells for $200. In addition, all manufacturers and exporters have to pay a minimum registration fee of $2,250 per year, even if they don’t export, Goriel said.
The Commerce Department, however, is prohibited by statute from charging licensing and registration fees. So for an estimated 60 percent of former State Department registrants whose products are moving to the Commerce Department, there are no annual registration requirements or associated fees. This directly affects the bottom line, she said.
Export regulations also are becoming more flexible. The Strategic Trade Authorization (STA) establishes a license-free zone covering the first export transaction for many parts and components that have been transferred to the Commerce Department. STA provides small businesses with an opportunity to ship license-free to 36 countries, as long as certain safeguards are observed.