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This learning guide will explore the importance of exporting, how to perform an exporting readiness assessment, and different market research strategies.

Just as we’re advised to diversify our investment portfolios and retirement accounts to mitigate risk and increase returns, the same rationale may be made for creating a proactive export strategy. Exports allow companies to take advantage of stronger markets overseas while countering weakening or declining US sales during times of domestic recession. The next section will cover some facts and statistics about exporting and its importance to a company’s growth.

Exporting Facts and Statistics

In this section we will explore the facts and figures around exporting to help you determine if its the right thing for you and your business.

Exporting can be a scary word for small business owners and entrepreneurs, but it doesn’t need to be! Below, we’ll list out a couple of the facts and figures that show why we think exporting could be a perfect fit for you and your business.

96% of the World’s Consumers and 75% of the World’s GDP are outside of the United States.
Exporting is a recession-proof business (Accounted for 2/3rds of US GDP Growth following the 2008 Great Recession) –Wall Street Journal
Exporters Grow Faster (since ’02, US GDP is up 133% and exporting is up 208%) –US International Trade Commission & BEA
Exporters are more innovative. Exporters have 7 times more patents than non-exporters –Study by USC and University of Minnesota

Realizing how competitive Indiana and the US are in international commerce, and the potential size of Indiana’s export business, let’s review the 8 steps required to assemble a proactive export development strategy for your company.

Exporting in the US & Indiana

The World Economic Forum ranks the United States as the most competitive exporting nations of all the major developed and developing countries.

America’s exporting competitiveness is reflected in the value of US exports of goods and services which today total about $3 trillion. Yet our nation’s percentage of exports to our nominal GDP of $27.4 trillion is just 11% while the percentage of exports contributing to our chief economic rivals’ GDP is 25% or more, with the global average being 42%.

If our nation is more competitive than all our leading economic rivals, shouldn’t our exports contribute at least 25% of our nation’s GDP? The answer is YES! By doing so, our nation’s exports would increase to $6.75 trillion. So, what’s holding us back? Incorrect perceptions! Many wrongly believe our country is uncompetitive and our products too expensive to export, yet as we’ve discovered above, that’s simply not the case.

Now let’s explore Indiana’s export figures to see how that competitiveness is reflected in our state’s economy. Spoiler alert, it is and in a very big way.

2023 Data:

Indiana leap-frogged Georgia, New Jersey, Ohio and Pennsylvania in 2023, moving from 13th to 9th in total state exports.
Indiana exported a record $56.1 billion in 2023, and out-exports California on a per-capita basis.
Indiana is the 7th largest Agribusiness exporting state.
Over 173K Hoosier jobs are from exports, 8th most in nation and just under Florida, a state with over 3 times our population.

Export Readiness Assessment

The first step in developing an export strategy is to identify what you know and don’t know about exporting.

Export Market Research

Once you’ve identified all the areas in which you need assistance, you’re ready to identify the best foreign markets to go into proactively.

You may already have received foreign inquiries about your products, and you may have already exported. Great – this is part of your market research process, your export history, and is one indicator of foreign market identification as is reviewing your website’s traffic / hits from foreign countries.

First Step – Identify the Schedule B (up to 10 digits) and Harmonized System / HS (6 digits) codes of your product(s). As mentioned previously, these codes are necessary for your export documentation, but also may be useful in determining the best export markets as the federal government tracks all US export volume by Schedule B code.
To do this, visit http://www.census.gov/foreign-trade/schedules/b/ to find product by word-search. If you need assistance or are unsure of the best code to use, contact an ISBDC Export Advisor. Once you’ve identified your Schedule B code, stick to that code despite requests to alter codes by distributors/foreign buyers (different codes may have different tariff rates, and foreign buyers may try and get you to change codes. Also, review the codes annually as there’s a chance those codes may change, and new codes added

Second Step – Visit the US International Trade Administration – Market Diversification Tool, and enter your 6-digit HS code and export history for a broad look at top export destinations. For a deeper dive, you can visit USA Trade Online to determine your export markets by your 10-digit Schedule B code by US and state export data. The 10- digit code is more narrowly defined so the export data is more accurate. While this database is free, it’s difficult to navigate, so reach out to the ISBDC for assistance as needed. The data will:

Determine what export markets your product is shipped from the US and by state.
Determine if the trends are positive or negative over time.
Determine if the US or Indiana has a trade surplus or deficit with that product.

Third Step – Research databases. You may find that the correct Schedule B code for your product is too vague or is too broad to offer much insight. You may find that the correct Schedule B code for your product is too vague or is too broad to offer much insight. Not to worry, there are many useful databases that you’ll want to access even if there is a strong correlation between your code and product, that offer great foreign market intelligence. Below are several of those resources that we at the Indiana SBDC use often.

Export Benchmarking

This step involves connecting with vertically or horizontally integrated companies of similar, complementary, and non-competing products

This step involves connecting with vertically or horizontally integrated companies of similar, complementary, and non-competing products to learn of other successful export strategies, particularly companies selling to your selected top 5-7 markets. Start with your existing network, firms you know well.

Export Benchmarking Will:

Lead to a wealth of information on and contacts in selected foreign markets; and
Strengthen domestic sales network and opportunities

Export Benchmarking Process:

Identify up to 3 benchmark firms.
Visit their websites – determine if they list their foreign market representation / distribution and cross reference with your list of top markets.
Call the benchmark firm and ask to speak with the person involved with their export development. If no one has been assigned, then ask for most appropriate person in charge (sales/marketing manager, VP, president, COO, CEO, etc).
Be candid on reason for call – that your employer is exploring foreign markets, conducting research, launching an export strategy, and wanting to discuss with other US firms offering complementary products their export experience. Be clear this is not a one-sided effort, that a sharing of information is offered and point to the potential synergy between your two firms.
Offer to send an introductory email on who you are, your firm’s product offering and web address to allow time for product/company review and suggest a time for follow up call at their convenience.

Common Export Benchmarking Questions (in addition to industry-specific issues):

What are their top foreign markets and why?
Do they use reps, distributors or go direct to end-user?
What foreign trade associations and trade shows do they belong to / attend?
Do they use social media in their targeted markets, and does it vary country to country?
Any major trade barrier issues they’ve encountered?

This step may greatly accelerate export identification and development, and the results may impact your final list of export markets. Benchmarking is done post-research so the findings and rationale can be shared, each company learning from the other.

Export Benchmarking

This step involves connecting with vertically or horizontally integrated companies of similar, complementary, and non-competing products

This step involves connecting with vertically or horizontally integrated companies of similar, complementary, and non-competing products to learn of other successful export strategies, particularly companies selling to your selected top 5-7 markets. Start with your existing network, firms you know well.

Export Benchmarking Will:

Lead to a wealth of information on and contacts in selected foreign markets; and
Strengthen domestic sales network and opportunities

Export Benchmarking Process:

Identify up to 3 benchmark firms.
Visit their websites – determine if they list their foreign market representation / distribution and cross reference with your list of top markets.
Call the benchmark firm and ask to speak with the person involved with their export development. If no one has been assigned, then ask for most appropriate person in charge (sales/marketing manager, VP, president, COO, CEO, etc).
Be candid on reason for call – that your employer is exploring foreign markets, conducting research, launching an export strategy, and wanting to discuss with other US firms offering complementary products their export experience. Be clear this is not a one-sided effort, that a sharing of information is offered and point to the potential synergy between your two firms.
Offer to send an introductory email on who you are, your firm’s product offering and web address to allow time for product/company review and suggest a time for follow up call at their convenience.

Common Export Benchmarking Questions (in addition to industry-specific issues):

What are their top foreign markets and why?
Do they use reps, distributors or go direct to end-user?
What foreign trade associations and trade shows do they belong to / attend?
Do they use social media in their targeted markets, and does it vary country to country?
Any major trade barrier issues they’ve encountered?

This step may greatly accelerate export identification and development, and the results may impact your final list of export markets. Benchmarking is done post-research so the findings and rationale can be shared, each company learning from the other.

Export Market Assessment

This section will outline the macro and micro factors that you need to consider when performing your Export Market Assessment

Macro Factors: Narrow down the list of 5-7 countries to a select and prioritized 2 to 3 target countries based on further research on the broader economic conditions of the markets being considered, analyzing our trade relations with those nations, and assessing their level of protectionism.

US Free Trade Agreements & FTA Countries Presented in these links are those 20 nations with which the US has a Free Trade Agreement (FTA), and how to benefit. Product must meet the FTA’s Rule of Origin. Subscription is required and is free. These agreements tend to lessen tariff and non-tariff barriers with our FTA countries, making US exports much more competitive in those markets.
US International Trade Administration – Market Diversification Tool Effectiveness of this tool is based on the level of correlation between your selected 6-digit HS Code and your product. Here you’ll also find the foreign markets’ tariff rates on your products, which also may impact market selection.
2024 World Economic Freedom Index – Heritage Foundation Excellent source – interactive world heatmap, ranking nations based on 10 indices including trade, property rights, judicial effectiveness, business, labor, and investment freedom.
2024 Coface Country and Industry Risk Map Similar world map analysis to Freedom Index but focuses on risk level. Database covers 160 countries and 13 industry sectors.
Country Corruption Perceptions Index for 2023 – Transparency International
CIA World Factbook 2024 – Great information on foreign countries, stability, size and growth of GDP, demographics, distribution of population by age, income, stages of economic development.
International Monetary Fund – World Economic Outlook January ’24 release. World, regional & country economic outlook, forecast, and analysis.
World Bank Global Development Data trade data, economic assessments, demographics on 211 countries.
Harvard Atlas of Economic Complexity – reviews trade flows by product, industry, great visuals, used to understand new growth opportunities for every country worldwide.

Micro Factors

To aid the narrowing process, consider those factors in each country specific to your industry sector and product.

These include factors over which you’ll have greater control, such as adherence to industry standards, varying customer design and packaging preference as well as areas over which you won’t have control, such as the health and growth of your industry sector in those markets.

Analyze the growth and long-term trends and prospects for your product & industry sector. The ISBDC’s databases including Euromonitor and IBIS World offer this type of information, as well as industry trade organizations.
Determine the industry and product standards required by each country’s regulatory bodies. Are some technical barriers higher in some countries than others, do certain markets tend to follow US standards vs the European standards? If considering the EU, review the CE Directives which outline many consumer products requiring the CE Mark before selling into the 27 nations comprising the EU. A good review of the CE Mark is found here: https://www.trade.gov/ce-marking, with a list of the EU Directives found here: https://cemarking.net/eu-ce-marking-directives/
Time Zones – if your product demands a lot of customer support, consider countries where the time difference is 8 hours or less. Use of in-country reps and distributors will mitigate this concern.
Consider the cultural differences of the countries under review. Understanding the cultural differences of your targeted foreign markets may impact your business approach and product design.
If protecting your intellectual property is important there are many resources to help you evaluate the potential risk and mitigating steps in each country. Those include:
- Lexmundi Country Guides – a database developed mostly by US law firms offering general legal and international business advice on issues including foreign trade, IP protection, property rights, foreign agency contracts on dozens of countries.
- Online IPR Training Module Videos – great introduction on learning different types of IP, processes involved to protect IP, different IP conventions.
- US ITA Overview on IP Registration and Protection Video on IP abroad.
- https://www.stopfakes.gov/IPR-Toolkits a great resource that, like the Lexmundi Country Guides, gives an assessment by country but also by industry.

SWOT Analysis

Finally, consider using a comparative analysis tool to list the pros and cons for each market under consideration.

Below is a SWOT Analysis example that outlines some of the topics to consider. If unfamiliar with SWOT analysis, a great overview is offered by IBIS World.

Ask your foreign customers and partners (representatives, distributors, buyers) for feedback on your products, the market and competitive positioning, and if there’s anything you can do to improve the product’s performance, packaging, ordering and payment process.