5 tips for expanding your business with cross-border trade
What you need to know and what you should do when it comes to cross-border expansion.
Cross-border trade can offer lucrative opportunities for your small business. If your company is ready to tackle a cross-border expansion, here’s how you can improve your chances for success.
1. Know the risks and protect yourself
Cross-border trade comes with substantial financial risk. Fraud, non-payment, currency fluctuations and even supply line problems can all affect your company’s bottom line. Good research is your first and best defence. You’ll also want to connect with experts and professionals who can help you reduce your exposure to risks.
Other ways to protect your business interests include cross-border guarantees or standby letters of credit, which are issued by banks and basically assure you that your U.S. customers or suppliers can pay. Export Development Canada offers export protection insurance against non-payment.
2. Find cross-border trade opportunities
Trade shows, trade missions and online sales are three relatively inexpensive ways to reach your target markets. Personal relationships still matter, and attending shows and missions is a great way to make initial contact with potential cross-border customers. Here are a few additional sources for opportunities:
CanadExport: U.S. trade opportunities, fairs, programs and missions
Canadian Trade Commissioner: Market studies and advice by industry sector
Trade Data Online: Industry Canada tracking of U.S. sales data in a number of sectors
U.S. Bureau of Economic Analysis: U.S. market data
U.S. Government Procurement: Government of Canada’s advice site for potential sellers to the U.S. government
3. Know the financials that affect trade
Reduce your financial risks by factoring known charges, fees and costs into your products and pricing. Have you considered exchange rates in your pricing? Do you have a plan if exchange rates become unfavourable? Here are other costs to consider:
You should also make sure you have enough stock, supplies, employees and equipment to handle the potential growth in your business that can come with cross-border trade. If you need more funds to support your cross-border expansion, talk to a financing expert to see what you’ll need.
4. Partner with other firms experienced with cross-border trade
There are firms that have the experience, contacts and infrastructure to get products to and from cross-border markets quickly and seamlessly. Use these companies to outsource the bulky paperwork and calculate taxes and duties. These firms can also do the heavy lifting involved in marketing, warehousing, order fulfillment and distribution services. For your actual products, companies such as freight consolidators can combine shipments and greatly reduce your fees and shipping costs. Finally, remember to include all these costs when pricing your products.
5. Work with experts
Export Development Canada, the Canadian Trade Commissioner and the Canada Business Network are great places to seek free expert advice. They can help you access market, financial and supply chain assistance. They can also explain some of the additional cross-border services available to Canadian small businesses, including CANPASS and Nexus, which speed up border crossings for frequent, pre-approved cross-border travellers.
If you're looking for ways to grow your business, cross-border trade is a potentially lucrative option. Consider the risks and opportunities, and get expert advice to help decide whether this opportunity could work for you and your business.
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