Paulson Manufacturing: Listen to Your Customers

Think that the face shields for firefighters’ helmets, the riot shields for police helmets, and the body shields worn by police are difficult to export? Not for Roy Paulson, president of California-based Paulson Manufacturing (http://www.paulsonmfg.com) and director of Paulson International in Germany, who makes these trademarked products and exports them all across the planet. Paulson Manufacturing’s total sales for 2013 are projected to be $18 million, with 25 percent of the sales resulting from direct exports. The indirect exports, items sold inside the United States but then reexported, are estimated at an additional 25 percent of total sales. The reexports are difficult to track and can only be estimated based on customer interviews.

Paulson’s business is very similar to that of the millions of small businesses in the United States that are eager to export. I spoke with him to find out how he’s become successful and what tips he can offer newcomers to the export industry.

Laurel Delaney: What’s the secret sauce to your international success?

Roy Paulson: What’s set us apart is that we have concentrated on developing our exports and rechanneling the innovations from all the international contacts into products for our domestic markets. We build our products in California, prioritize the use of domestic materials and, hence, we are able to successfully sell all around the world.

Delaney: Are you globally competitive on everything you manufacture?

Paulson: It is selected product items that sell the best internationally. We find that the most innovative products sell the best internationally, and it is very important to listen to what the customer wants. Don’t shove what you have down their throats; your business will not grow and you will be resented.

Delaney: How do you gauge what new product or new market to take on next?

Paulson: The feedback from our international sales team is very important to developing our international product line and business plans. We consider the feedback precious, good or bad news—does not matter—we take it all in and use it to our advantage. In the end it is to the advantage and benefit of our customers.

Delaney: Where can a small business owner get blindsided in his export activities?

Paulson: It is very important to make sure that everyone is making money in the entire supply chain. Otherwise, the business will be short term. This is the responsibility of the US exporter.

Delaney: What about the product side of pricing at a profit?

Paulson: Price rarely comes up, unless there is a large Request for Quotation [RFQ] or a competitive situation. My position is to not sell on price, but rather to sell on innovation.

Delaney: What other advice can you provide relative to what you’ve learned on the road to exporting success?

Paulson: I have two more critical points: First, visiting customers in their own country is one of the keys to exporting success. These visits must be on a regular basis and within the time frame expected of the customer. We have the tendency to rush in and out. This will not work in export development. When you visit your customers, take your time and stay a while. You will get more business simply because of your attitude.

Second, I have traveled the world, selling our products and developing relationships with my customers and discovered the key to achieving export sales is relationship selling. There is a simple formula I use related to developing exports. In domestic sales, for example, we cherish and defend a transactional selling method where the prioritization is on price, quality, and delivery. Domestic sales are typically 75 percent transactional and only 25 percent relational. With export sales, relational selling is 75 percent of the equation with 25 percent being transactional. This is the key to developing export sales and achieving long-term export success.

Roberts & Company: Get Things in Writing

Taking companies global helped Barbara Roberts¹ increase her revenue. Before it was sold to Getty Images, FPG (Freelance Photographers Guild) International, the company that Roberts was formerly the president of, was already one of the largest stock photography companies. The company sold the rights to use its photographs in local advertising and editorial products internationally. It did this by finding a local stock photography company and contracting with it to allow the company exclusive licenses of FPG’s photographs in its country.

The other company that Roberts served as president of, Acoustiguide, is the supplier of audio tours, equipment, and staff for museums and historical sites around the world. At the time she was president, Acoustiguide supplied these audio tours through direct sales, joint ventures in a specific country, and wholly owned subsidiaries.

With both of these companies, international business grew to account for between 30 and 40 percent of revenues. I talked with Roberts (Roberts & Company (http://www.brobertsco.com) to find out what she learned when she took these products global.

Laurel Delaney: What did you learn from your exporting experience that you can share?

Barbara Roberts: First, you cannot go international without having a lot of things in writing. In both of these companies, the product that we were selling was intellectual property . Accordingly, legal work and documents were a critical part of our process and success or failure. For successfully selling this type of product, putting all details, expectations, rules, and obligations in a contract was necessary for success. This was of course important doing business in the US, but if there are language barriers in verbal discussions, it is even more critical to have very detailed written documents that can be translated into any necessary language.

Second, you will be more successful in international sales if you have the right local partner or employee. In my experience, people who found me often worked out better than people I actively sourced. Potential international partners who had found me typically had done research on me and our company and had carefully thought through how we fit into their strategy and market. They had a much better understanding of how we fit than we ever could have understood as an outsider. The process to come to an agreement often went faster and more smoothly. You also need to be easy to find, so the development of a strong web presence and attending and speaking at international conferences in one’s industry are good starting steps to developing an international business. You want to be known and easy to find.

Third, when going global, you may find that collecting money is easier than firing [overseas] staff. Many business people are hesitant to go global because of the fear of collecting money. In my experience if one sets up the right legal structure, this is not a common problem. A bigger learning point for me was the fact that many countries have much more stringent rules and financial penalties for firing people or closing unsuccessful operations than we experience in the US. If you hire local people or start a local operation, it is critical to learn up front what the local rules and financial penalties are for firing someone or closing an operation.

Lastly and most important, you should see going international as an exciting learning adventure. One cannot be successful internationally without a willingness to suspend judgment and be open to accepting that everyone carries a cultural bias. Licensing photographs internationally and developing audio content to explain local cultural institutions particularly demanded the willingness to always assume one could get something very wrong. For instance, simple things like the number of golf balls in a photo or the color of the scarf someone wore could instantly make a photograph that earned thousands of dollars in the American market worthless in another country. One had to learn different numbers mean bad luck in different countries and the color red in particular has very different connotations worldwide.

However, I do want to comment on the fact of increased personal risk for business people who internationally travel. I experienced a kidnapping attempt in Venezuela and do recommend that if one does international business travel that you are thoughtful and deliberate about your personal security.

Marlin Steel: Translate Your Web Site to be Foreign Friendly

“We were once a company nearly felled by cheap steel from China. We’re now a thriving business that exports to thirty-six countries,” says Drew Greenblatt, president of Marlin Steel (http://www.marlinsteel.com), about his company’s explosion into exporting. Exports now constitute about one-fifth of the company’s sales. Marlin Steel exports steel products to Argentina, Australia, Austria, Belarus, Belgium, Brazil, Canada, China, Columbia, Costa Rica, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Guinea, Hungary, Iraq, Ireland, Israel, Italy, Japan, Mexico, the Netherlands, New Zealand, Norway, Philippines, Poland, Puerto Rico, Saint Thomas, Singapore, Sweden, Switzerland, Taiwan, the United Kingdom, and Uruguay.

I asked Greenblatt his thoughts on why exporting is a valuable business decision for American companies.

Laurel Delaney: Why should American small business owners look to export?

Drew Greenblatt: Free trade agreements get some bad publicity—that they’ll cost American jobs—but export businesses create a lot of jobs. About 95 percent of the world’s potential clients live outside the United States. That market is becoming wealthier and will require services and products. There’s a growing world of customers beyond our borders. And the waves of activity that occur in your niche in America may have nothing to do with the same niche in Japan or Canada or Germany. Your local economy could be in the doldrums, while your prospects halfway around the world could be good. Export jobs typically also pay better—20 percent more on average.

Delaney: What tips can you provide to help a small business get started with exporting?

Greenblatt: After receiving initial expressions of interest from overseas and a major order from Asia several years ago, Marlin Steel expanded its export business plan with help from the Baltimore Export Assistance Center. The US Department of Commerce International Trade Administration runs similar centers around the country. It helps connect businesses with trade promotion events, trade missions, and other programs.

We’ve done several things to grow in the international marketplace. We translated our Web site to be friendlier to foreign customers. We now have versions in Japanese, German, Spanish, and Korean. You have to make it easier for those customers to find you.

We’ve also tapped several government programs that have been helpful. One of those is the Export-Import Bank of the United States’ guarantee of receivables. When we shipped wire forms to an electronics maker in Singapore, the Export-Import Bank provided the guarantee for a small insurance premium. I’d never heard of the electronics company and neither had my banker, but we were both able to sleep at night because the transaction was covered. The government kept 0.5 percent of the deal for the coverage; I got the other 99.5 percent. Not to be overlooked, my employees got some overtime out of the contract and a local producer received my steel order. Many manufacturers are probably not aware of the program. It could help lessen some of their anxiety about exporting.

Another helpful program is the Gold Key Matching Service by the US Commercial Service of the Department of Commerce. For a nominal fee, the service prequalifies prospective companies to meet with overseas and provides a translator and a driver (important in places where you can’t read the street signs). The service covers about seventy nations that constitute most export markets for US business. I used the service when I visited Korea on a trade mission with the governor of Maryland in 2011.

Delaney: What did you learn the hard way?

Greenblatt: The paperwork thicket can still be frustrating. While we need only a few minutes to fill out the requisite forms when we ship to Canada or Mexico, it takes twenty minutes per form when shipping to a non-NAFTA country. A few years ago, we took a photograph of two Marlin Steel employees standing beside the cartons that held our files to respond to regulations; the stack was three feet taller than they were.

There are cultural issues to recognize as well. The exchange of a business card with Japanese and other Asian prospects requires more formality and procedure, for example, than that same act between American businesspeople.

Although some folks have gotten cynical and don’t always give it its due, “Made in the USA” remains a coveted brand worldwide. American businesses are missing opportunities by not taking more advantage of that.

Quality Float Works: Diversify to Maintain a Competitive Presence

As the CEO and design engineer of Quality Float Works (http://metalfloat.com), Sandra Westlund-Deenihan is at the helm of a long-established family-owned business located in suburban Chicago. In 1915, Westlund-Deenihan’s grandfather started the company, which makes hollow float metal balls and float assemblies that are used to level liquid controls in a wide variety of industries including gas and oil production, plumbing, and agricultural applications. The devices help regulate and monitor liquid levels, temperature, rate of flow, air pressure and other related applications in a variety of equipment and processes. Keeping the company in the family, Westlund-Deenihan and her son, Jasper Speer, run Quality Float Works. The company exports to Australia, Belgium, Canada, China, Germany, Indonesia, Ireland, Mexico, Nigeria, the Kingdom of Saudi Arabia, Oman, Kuwait, Singapore, Vietnam, and several locations throughout the United Kingdom and Latin America.

During the past decade, the company’s international sales have increased from 3 percent to 7 percent. One reason for the boost is the opening of the company’s first international distribution center, Quality Float Middle East, in Dubai in 2011. The company is looking to further expand in GCC (the Gulf Cooperation Council) area to fuel future growth.

I talked with Westlund-Deenihan about what it takes to run a successful family-owned exporting company.

Laurel Delaney: What was the biggest challenge that you faced in developing exports for your company and how did you manage it?

Sandy Westlund-Deenihan: One of the major factors contributing to our success is the ability to enter new markets through utilizing free trade agreements [FTAs]. We have continued to be successful despite a tough economy due to our international business through our ability to capitalize on opportunities, which have continued to allow us to tap into new markets abroad. Businesses of all shapes and sizes need equal access to enter new markets in a fair way, and FTAs represent an excellent opportunity for small businesses like mine to maintain our global competitiveness—even during times of a stumbling US economy. That said, trying to enter new markets in the absence of FTAs has presented hurdles for our company.

Keep in mind, we moved into the international marketplace by taking advantage of a weakened dollar to manufacture our unique products on a competitive basis. During a trip to Panama in spring 2011, when we were seeking distributors and customers for our products, we were faced with import duties of 3 percent to 10 percent. We also lost out on a customer opportunity in South Korea due to a lower bidder from a European region that was able to secure the business, as it did not need to factor in an increase in price due to tariffs. It wasn’t until the FTAs for these nations were signed into agreement later in 2011 and implemented in 2012 that we were able to fully enter these new markets and regain interest from customers. With the current state of the US economy, our foreign partners view American business as a win-win.

Another challenge we have faced relates to getting our product in the hands of our customers in a timely and cost-effective manner. To help us manage this issue, we established a distribution center in Dubai to shorten travel time; we can’t afford extended travel time via shipping. In our industry, time is money.

Delaney: What’s been your biggest export success? How did it happen?

Westlund-Deenihan: Quality Float Works, Inc., initially dipped its toe into the international marketplace with a few customers in Canada and South America back in the 1950s. But it wasn’t until 2001, coming out of the September 11 tragedy, that the company needed to diversify in order to increase our competitive presence.

During a trip abroad, Jason discovered a new market niche he felt was a perfect fit for Quality Float Works, Inc. to explore. Developing nations across the globe were lacking the technology to desalinate and purify water for a wide variety of needs in both domestic and industrial use. Jason returned home and immediately began working to develop a new product line, the Quality Float Valve Division, which would take its float balls and turn them into full assemblies to help purify and desalinate water. The Quality Float Valve Division capitalized on a market need to provide entire float assemblies to customers.

We continued to enhance marketing and networking efforts abroad knowing it may be more cost-effective for foreign customers to purchase a US product and have it shipped overseas rather than purchase products locally. As the dollar slowly began to recover, customers stuck with us because we make a quality product and it is also financially beneficial. This overall strategy has yielded new customers in new parts of the world.

Delaney: Where do you see growth opportunities for your business? What new export markets are you considering pursuing, for example?

Westlund-Deenihan: In 2011, Quality Float Works, Inc. continued its foray into the global marketplace with the opening of its first international distribution center located in Dubai, UAE. This location, which began developing a stronger base in the region and stocking products in 2012, allows our company to get our products to market quicker and further expand the company’s regional customer base. It also provides the opportunity to explore additional unique opportunities for expansion throughout the Middle East, including strategic business partnerships to further grow the company’s bottom line. Without a doubt, this represents the boldest play the company has made related to the international marketplace. With this further expansion into this region, we are pursuing sales representation in South Africa as a means to tap into the market base in Zambia, Namibia, Angola, and Mozambique.

We are also keeping a close eye on the Trans-Pacific Partnership Agreement [TPP], which will open many more opportunities for our company to compete in the global marketplace by further leveling the playing field and allowing us access to compete for business in new territories.

The TPP is a free-trade agreement between the United States and eleven countries in the Asia-Pacific region: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Combined, the TPP countries account for $800 billion in US exports, supporting 4.5 million jobs nationwide.

Currently, our company does business in seven out of the eleven TPP countries, but we are eager to explore opportunities that exist in new TPP markets if the TPP is successful in lowering tariffs and regulatory barriers.

Delaney: Where is your business vulnerable on the export front?

Westlund-Deenihan: A fair area of vulnerability on the export front is the same vulnerability we face on the domestic front—the economy. When other countries’ currencies drop, products made in those countries drop in price as well. That is a direct threat to companies making products in the US and exporting overseas, as we directly compete with their domestic markets. We are not the only ones vulnerable—97 percent of all exporters in the US are small businesses like ours.

For example, if the euro drops, we will be facing competition from manufacturers bringing a product to market at a reduced sales price. If that happens, we will focus on stronger economies that are emerging in other marketplaces. If there is one thing we’ve learned over the past decade, it’s the importance of diversification of our product line and target markets.

Delaney: How have you used technology and social networking to drive export revenues?

Westlund-Deenihan: Let me be clear: Expanding a business into the global marketplace does not happen overnight. And, while there are some great online learning tools, this isn’t something you can do solely over the Internet. It takes an investment, an investment to travel overseas, meet with partners, and the use of some good old-fashioned shoe leather. At times, we may choose to talk to customers or potential customers over the phone or Skype. We are in a competitive industry where ideas and engineering specifications can mean the difference in product performance, so we do tend to be very careful about openly sharing information.

We are on Facebook, LinkedIn, and are gaining steam with a newly launched Twitter account. Our Web site, which we’ve recently redesigned, is bringing in business globally that we never had before. We have seen a boost from social media syndication and share of news coverage of our company and our industry. We are often called upon by local and national media to comment on market trends impacting small business and manufacturing. Those stories have gained us increased exposure to a broader audience through the media’s social media vehicles sharing the information with their audience, leading us to potential customers and partners who may not have learned about us before.

Delaney: What’s the best advice you have for someone who has never exported but is eager to?

Westlund-Deenihan: You can’t succeed in the global marketplace if you do not compete in the global marketplace. Customers overseas appreciate—and want—American products. The “Made in the USA” stamp on our products matters.

I urge anyone who has thought about exploring the idea to take advantage of certain programs and opportunities. For my company, the Gold Key Program provided us with crucial information about market trends overseas. It also helped us identify our competitors and locate key industry contacts in the regions we were exploring. As with any new venture, it is always helpful to connect with an expert in the industry—someone who has navigated the hurdles and can help you avoid some of the mistakes she made along the way.

When it comes to competing in the global marketplace, the bottom line is, the dividends are there. If a third- and fourth-generation family-owned small business from Schaumburg, Illinois, can do it, so can you!

GlobalCare Clinical Trials: Hire In-Country Personnel to Handle Day-to-Day Activities

GlobalCare Clinical Trials, Ltd. (http://www.globalcarect.com), exports its nursing services to North America, Latin America, Europe, and Asia-Pacific through a network of highly skilled and trained clinicians. The company has operating offices in the United States and Poland and has a registered office in the United Kingdom. Its services include global project management, the study of drug administration, blood and other biologic sample collection, clinical assessments, patient training and education, the administration of questionnaires, and source documentation.

I spoke to Gail Adinamis, the chief executive officer about the exporting process as it applies to global nursing services.

Laurel Delaney: Gail, what are the challenges—and opportunities—of providing a nursing service to foreign markets?

Gail Adinamis: GlobalCare services are dependent on the availability of local nurses in each country who are licensed to conduct the tests/assessments ordered for the study. Therefore, a country analysis is required prior to executing services in order to understand their health care system and what clinicians are typically authorized to do. There is a wide range of educational requirements for nurses across countries as well as varying regulations. For example, in some countries, nurses are not allowed to draw blood or administer drugs without a physician present (which defeats the purpose of a home visit).

There are also strict patient-data-protection policies that do not allow patient information to leave the country. Therefore, we are required to have in-country personnel to receive physician orders to contact patients and schedule home visits. In the US, most nurses have their own cars. In other countries and regions, like Europe and Asia, nurses may not have cars and rely on public transportation or expensive taxis, so it is important to calculate this into your costs for conducting services. In many countries, many nurses may only have cell phones, so sending fax documents is not easy, as they may not even have a landline. There are not corner Walgreens with fax machines or Kinko's to easily stop in. Courier service is also another area of major difference. Unlike FedEx or UPS in the US, there are not drop-off locations in most other countries. You are dependent upon scheduling a pickup and waiting for a four-to-eight hour window. Importing equipment into different countries can also be very challenging. Ukraine seems to change its requirements on a regular basis. I suggest doing a test shipment with a small quantity initially before jeopardizing a large, expensive, and potentially time-sensitive shipment. Be prepared also to pay a variety of fees.

Just like there are differences in logistics, there are differences in people/culture in different countries. In the US, if you ask someone how they are, they are usually fine. Eastern Europeans are never fine; they are usually complaining about how bad things are. In the US, people are very skeptical about strangers asking for information; in India, a nurse may go to the wrong home and ask to draw blood from the person and they will be happy to allow this since they feel they may be getting extra care. In the US and most countries, if you say yes, this usually means you agree. In Japan, this only means that they acknowledge that they heard what you said, not necessarily that they agree with you. So you may think you have consensus but find out that you don’t.

Currency differences may also pose some challenges. Working with a US-based company may require proposals in US dollars, but we are required to pay our staff in other countries in local currencies. To avoid risk, we usually include a caveat that rates may be subject to change if there is a currency fluctuation of plus or minus 5 percent or 10 percent.

The greatest challenge in providing a global service is to establish standard procedures that can and will be followed by all countries and personnel. Time zone differences, language barriers, holiday schedules, work ethics, et cetera, all contribute to the challenges of effective and timely communication and implementation. However, it is the standardization of services that creates the value for our clients and for which they are paying. It has been critical to ask a lot of questions, listen closely, and trust but verify procedures to ensure that there is no misinterpretation of requirements or inadvertent or intentional deviations by personnel. Skype is a highly effective and virtually free service to conduct international calling and video conferencing around the globe. Without Skype, our international phone bills would be quite exorbitant.

Providing global services has many challenges, but these are welcomed since if it was easy, I would have many more competitors.