Capital Region Business Journal

Two-thirds of the world's purchasing power is located outside the United States, making foreign markets a strong opportunity for Wisconsin companies looking to expand their sales and customer bases.

But business owners who are keen on exporting shouldn't expect overnight success abroad.

Experts contend it's essential to have a plan for everything from how to get paid when they sell internationally to how much money they can afford to invest ? and lose ? before they turn a profit on overseas sales.

One of the most important things a company needs is patience, said Doug Hartel, who owns Fort Atkinson-based Letrah International Corp., a consortium that buys products from small- to medium-sized companies and resells them overseas.

"You have to have a lot of stick-to-itiveness," said Hartel, who first delved into international business as founder of Hartel Corp., which manufactures large systems for biotechnology, cosmetic, dairy, food and pharmaceutical companies.

Hartel said he decided to get into exporting in 1979 because there was little room left in U.S. markets to grow his company. He started traveling the world, eventually visiting 65 countries. Within 15 years, exports accounted for 40 percent of Hartel's overall business.

That prospect could be daunting to small-business owners, but Wisconsin companies have a number of resources available ? some of them free ? to help make exporting pay off.

The U.S. Department of Commerce has an Export Assistance Center in Milwaukee that works with companies to identify potential distributors and offer market research, for a fee that can range from a few hundred dollars to several thousand depending on the complexity of the request.

The office also can help set up meetings and arrange for interpreters, director Paul Churchill said.

The Wisconsin Department of Commerce employs four outreach specialists who work with companies one-on-one to evaluate their products and operations, launch market research and connect them to potential distributors. The agency gets help from the state's trade officers in Brazil, Canada, China, Europe and Mexico.

There is no charge to companies that work with the state's export staff, but it costs $550 for a detailed market study. That price includes setting up appointments with potential distributors, said Mary Regel, administrator for the state Division of International and Export Services.

"It is a very inexpensive service. If you went to the private sector, it would be several thousand dollars," she said.

"There are times when the best thing that we can do for a company is to tell them that they're not ready to export," Regel said. "The last thing you want to do is try to encourage a company to do something where they're going to fail."

State government also offers export education and other help through the International AgriBusiness Center, housed in the Wisconsin Department of Agriculture, Trade & Consumer Protection, which works more specifically with businesses that make and sell agricultural products.

The center, funded by the U.S. Department of Agriculture, brings potential buyers to the U.S. to meet with Wisconsin producers. It also administers a program that reimburses small- to medium-sized state companies for costs associated with marketing their products internationally, including travel.

Bureau director Lora Klenke said the program, which charges no fees for consulting with businesses and small fees for distributor searches, is not limited to supporting traditional agricultural products. It also includes alternative building supplies and cosmetics made from organic ingredients.

"A lot of people think of agriculture as cows and corn, but we're trying to expand that view," she said.

The center also helps companies determine what regulations apply to their products in other countries.

"A lot of times products get stuck in Customs and either are shipped back at the manufacturer's expense or dumped at the border because they don't have the proper documentation," Klenke said. "It's overwhelming the first time you go through it."

UW-Madison's federally funded Center for International Business Education and Research offers seminars on subjects including finding distributors and foreign languages.

Sachin Tuli, CIBER's assistant director, said businesses can benefit from the firsthand knowledge of UW faculty who conduct research and work on projects around the world.

"They know what's going on with the government and then they also know what's going on with industry," he said.

Tuli said the center's programs are usually priced under $50 and topics have included getting a foot in the door to exporting, as well as more complex issues such as security concerns and currency fluctuations.

CIBER also partners with the state Commerce Department's trade show grants program, which picks up trade show costs for biotechnology companies. CIBER complements that program by picking up travel costs for up to two company representatives.

"It's really a way to grow sales and grow as a business," Tuli said. "Everybody should be thinking about international as an opportunity for staying competitive and growing."

Groups like the Madison International Trade Association can help companies new to exporting find information and connections to help them succeed.

Eric DeWerd, sales manager for Standard Imaging Inc. in Middleton, said the help companies get from trade associations can be critical in the early stages of building an export operation.

"There's tremendous potential and it can be frustrating early on when it doesn't seem clear the path to take," said DeWerd, whose company designs, manufactures and commercially distributes testing instruments used for radiation treatment.

Del Brahm, president of the South Central Wisconsin World Trade Association headquartered at UW-Whitewater, said fledgling entrepreneurs don't have to spring for the cost of the group's dinner meeting to benefit.

"Go there and rub elbows and leave before the dinner. ... Ask them who they're dealing with. Ask them what they're doing," said Brahm, who runs Franklin-based Brahm International Ltd., an industrial exporter and freight forwarder.

Brahm also suggested calling companies like his, along with banks or insurance companies, to get free advice that results from their trying to sell export-related services.

"You can spend a half-hour or an hour easy and get a lot of good, worthwhile information at no cost," he said.

Some companies find cooperation is the key to entering international markets.

Accelerated Genetics of Baraboo, which sells bull semen to customers in more than 60 countries, uses its membership in the National Association of Animal Breeders to help navigate government procedures and international health protocols that govern genetic material.

"We share information and have one voice on an international front," said Bob Holterman, the company's vice president of marketing.

That means working in concert with competitor ABS Global of DeForest to overcome trade barriers, he said.

"Believe it or not, it works pretty well," he said. "We have to have entrance to those countries before any of us can compete."

Eventually, the resources available close to home won't be enough for companies seeking information on how and where to export. That's where the frequent-flier miles come in.

"What we ugly Americans all too often don't do is what most foreign people do: Get to know their buyer and seller first before they do business with them," Brahm said. "We figure, 'I'll give you a good price, you'll buy it.'"

Travel also is essential for the work that has to be done to select foreign distributors, the most critical relationships for companies planning to export.

"Choosing the distributor is the most important decision ? really understanding all there is to know about them and what level of dedication they'll give," said DeWerd, who has worked on Standard Imaging's international sales for four years. "If you didn't set up a good one, you've wasted one more year you're not in that country."

Tuli said that's an area where patience, once again, must come into play for U.S. businesses seeking to export.

"We're kind of 'get it done' whereas in other cultures, there's the expectation for the relationship to evolve and, as that's built, there's trust and the terms become easier," he said.

State exports have grown steadily in the last decade, from $2.6 billion in 1987 to more than $12 billion.

"There is no reason not to do it," said Renee Pfeifer-Luckett, director for Letrah International Corp. "Any good business person can learn how to manage risk."

The companies that export from Wisconsin are diverse, ranging from traditional manufacturers to biotechnology firms.

Regel said companies need to have a top-quality product, have their entire organization committed to exporting and be financially sound to succeed in international markets.

"This is not something to get into because you are losing money and you are not well-financed," she said.

Stoughton-based Doggyworld.com began exporting its gourmet dog treats overseas about four years ago after a representative for an export management company approached owner Jim Marcks during a trade show in California.

Exports make up just 5 percent of Marcks' business, but he said feedback from customers in other countries, including England and Japan, have helped him develop products at different sizes and prices.

"Once we did it, it helped us in the domestic market as well," said Marcks, who started baking the biscuits in his kitchen eight years ago for his two Labrador retrievers.

The way Marcks first got into exporting isn't uncommon, said Patrick Cronin, director of international services for Virchow Krause & Co.

"Most people, particularly small, midsize companies usually get into the export business by mistake," Cronin said. "They get a call from somebody overseas who says, 'I found out about your product from a Web site. Can you sell it to me?'

Cronin said that puts companies at risk for making mistakes that could be costly if they don't do their homework or find out answers to important questions, including how they will get paid for their products, before ramping up their export business.

Freedom Plastics, a Janesville-based pipe and fittings manufacturer that has been exporting its products for more than a decade, usually relies on letters of credit for payment for overseas orders. But the company decided to establish stricter terms for a recent large order from Taiwan, said Mark Palasini, executive vice president for sales and marketing.

Cronin said moving slowly into international markets and learning at each step is the best way to build a successful export business.

"Anything overseas is really a walk-before-you-run-type of proposition," he said. "It's gravy, or it should be gravy. It shouldn't make or break a company."

Marcks did not immediately jump at the export management company's offer to distribute his products internationally. Instead, he spent three months checking on the firm with some of its current customers and vendors.

Marcks decided to hang onto his company's business with Canada but turned exports to other foreign countries over to the management company.

"I looked at doing it ourselves but not knowing who you're selling to on the other side is kind of scary and payment terms and shipping and logistics of just getting products overseas is a whole other game plan that I didn't have any knowledge of," he said.

Palasini said Freedom Plastics employs similar methods in deciding whom to sell to, often asking for reference letters from other U.S. companies that have worked with prospective overseas customers.

"The only thing we try to be very careful of is who we deal with," Palasini said.

DeWerd said he should have done more research before setting up a deal for Standard Imaging with a distributor in the Netherlands, mistakenly believing the firm was connected to a major company he wanted to do business with in the country.

"I didn't learn until later they were no longer representing them. I didn't do my homework," he said. "I discovered they were cut off because they weren't really doing that well for them."

Regel, whose agency helps between 500 and 600 businesses a year, agreed that patience is one of the keys to export success, even though some companies seek quick results.

"The international sales person is working as hard as they can and maybe their boss is going 'come on, we're putting out all this money. Where are the results?'" she said.

The time companies put into figuring out where to sell their products is as important as with whom they make deals.

Wisconsin's largest market is Canada ? more than one-third of the state's exports go there ? and it's where many companies get started because of its proximity and common language. Mexico, where Wisconsin exports have doubled in the last decade, is also a growing area.

Again, companies should take the time to learn about where their products and services are in demand, said Churchill, with the federal export assistance center.

"The biggest mistake I've seen is going into markets because other companies are going into those markets," Churchill said. "You need to look at it and analyze it and spend some time studying and understand what is actually going on before you make that leap."

Exporting from Wisconsin

By Jenny Price

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