In this series, we challenge the common perception that every company should be exporting. We think more attention needs to be focused on advising companies who probably should NOT be exporting. They either are not ready, or their current approach to international expansion creates unnecessary risks for their company.
In previous blogs in this series, we looked at “Hamsters On a Wheel,” and “Let’s Not Spend Much” kinds of companies.
Our third type of company that should maybe stay home is:
The Alfred E. Neuman Fan Club Member
For those of you who aren’t familiar with the iconic face of Mad Magazine, Alfred E. Neuman, his famous tagline was “What, Me Worry?”
Neuman was famous for shrugging off anything and everything. All too many companies subscribe to this theory when it comes to compliance. Oh, they will talk a good story and say the right things, but when it comes to actually creating and implementing the necessary compliance, there’s always another crisis or project that moves to the front of the line.
Exporting products or services involves lots of compliance issues.
Things to consider include export compliance and local import requirements, free trade agreements, product packaging and labeling, local product registrations, anti-bribery laws, and international tax laws and planning.
Companies that fail to comply can run into serious — even company-threatening — problems. Fines and legal fees mount, customers are lost, deals suddenly become unprofitable, valuations plummet.
Many smaller (and even a few “largish” ones) really don’t want to invest any resources in these things.
Or they mean to get ’round to it, but other urgent things always get in the way.
Besides, they haven’t gotten caught yet! So there’s no real reason for concern, is there? And investors reward management for making revenue numbers and managing expenses, not spending money for problems that aren’t immediately apparent. And if a company hasn’t had any problems (read: gotten caught) yet, it’s easy to be lulled into a false sense of security.
Companies that are serious about exporting learn about all the applicable requirements, and then calculate the investments necessary to minimize these risks before they start exporting.
If the cost of compliance makes your international sales unprofitable, then you should think long and hard about exporting. Why not stay home, and look for other, less risky, ways to grow your business?
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