How to set your company up for success on the international market

There are major sources of volatility at the macro level now that are clouding what continues to be a relatively favorable global growth environment. Issues such as Brexit and, much more recently, the increased tension with Iran, are tough for businesses to think through with respect to how they might impact their business’s performance, often indirectly.

Further, and more acute at the micro level, are the current trade tensions with China and the potential for that to manifest in supply-side issues. Companies are concerned not just with how to deal with the increased costs associated with tariffs, but how to cope with the potential sudden loss of access to vital manufacturing components.

However, in spite of these headwinds, the international markets continue to offer compelling opportunities. In fact, many forecasters have recently increased global forecasts for 2020 to levels above the 2019 actual.

“It would be easy to assume, looking just at the headlines, that overall global trade is contracting,” says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank. “However, just in the U.S. between 2016 through today, year-end trade is up about 30 percent over that period, so companies are cognizant that there are still opportunities across the globe. The issue becomes how to seize on those opportunities while mitigating exposure to the obvious risks.”

Smart Business spoke with Altman about the keys to finding success on the international market.

What help for issues and opportunities in the international market are companies typically seeking from their bank?

In part, companies look to their banks for product solutions, such as trade services, foreign exchange, and credit insurance, that help de-risk foreign deals. But beyond that, many companies are looking to their banking partners for actionable insights. They want to leverage their bankers’ broad experience working across different countries and across a variety of industries to provide advice that helps them navigate risk while pursuing growth opportunities. Business owners and executives want a proactive partner that operates with their best interests in mind.

How can companies better position themselves for success and mitigate risk as they engage in international trade?

An important step is picking the right advisers, including accountants, legal counsel, and an experienced banker. Regarding the latter, it’s also important to find a bank that specializes in working with companies of similar size. Different banks have different targets — some cater their services to Fortune 500 companies, while others tend to focus more on small or middle-market companies. Companies can find that they’ve outgrown their current banking provider or that their global bank isn’t focused on businesses of their size or industry.

Finding the right partner that’s both capable and engaged is important to a company’s success. Companies that find they need to call their bank for ideas instead of their bank calling them with insights probably need to look around for another partner.

What common mistakes do companies that are interested but not yet engaged in international trade make that could be a setback?

Both small and very large companies can sometimes underestimate the risk associated with the countries that they’re dealing in. Dealing outside of the U.S. introduces new and unique risks that are easy for companies to overlook.

An example might be currency controls instituted by a foreign country that prohibit even a strong customer from remitting foreign payments, or nationalization of a foreign plant by a local government. Often cultural differences are overlooked, too, which can impact not only payment experiences but also a company’s ability to deploy a successful sales strategy in its target markets.

As a general rule, companies that perform the best tend to be those that don’t go it alone and that recruit help in assessing and mitigating risk, as well as assisting in developing sales strategies that reflect local practices and conditions. This allows companies to focus on what they do best, while leveraging the strength of their partners to be even more successful.

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