A Good friend who travels a lot sees a product similar to yours selling for double the price in Country X and excitedly tells you that you should sell your product there – you could make a killing there by selling at double the price! But should you?

The reasons for considering exports as a way to grow your business are well documented elsewhere (Export.gov, National Export Initiative) and include the fact that 95% of consumers live OUTSIDE OF THE UNITED STATES and therefore can only be reached by exporting.

But realistically you need to know a bit more about the market for your product in Country X before you decide to jump into that market. Most people are surprised to learn that the product sells for that seemingly high price because it MUST in order to cover the additional costs of shipping, duties, tariffs, taxes, and so forth and not because the other company selling the product is greedy and making a lot of profit.

So in this case the reason to export to Country X might be because you can reach another portion of that 95% and significantly increase Revenues (hopefully at an acceptable profit) and not because it seems like you could make a much higher profit on each product unit sold.

We will discuss this further in other articles, but do consider that the decision to export or not while very important to your business, can be complex as there are even more things besides price that you need to consider before making your decision.

Now that you are thinking about exporting, but before you spend a lot of time on that export plan or for that matter a lot of money, you need to find answers to several questions and your answers need to be consistent among themselves.

Well, okay, we should also include the more basic "Why should I export?", but since you already decided you want to consider exporting that should be taken care of (but I like to periodically revisit this question so we make sure everything is still aligning). Here they are:

What should I export (and CAN I export it)?

Where should I export?

How should I export?

Who will sell my export?

Read more: Thinking about Exporting? Here are some Basic Questions to answer Before you Start

Exporting is similar to doing business in the US, but there are some important differences you must be aware of and take steps to deal with.

Okay, so what is an ECCN first and then why should I care?

There are a number of parameters involved in the questions of:

Can you export something?

Do you need an export license?

For the Can you ship this product, service or technology question, you must be able to answer and document the following questions:

What are you shipping?
Where will you ship it?
To Whom will you ship?
What will they use it for?

The What are you shipping requires several different answers (e.g. schedule B or ECCN) on different shipping documents, but in this article we address the ECCN, which will determine whether you need an export license.

Export Control Classification Numbers (ECCNs) are the classification code used to identify the category of your product, service or technology. The ECCN classification code is then used to determine whether or not you need an Export License for each shipment of your item.

The process to use the ECCN to determine whether you need an export license or not is:

1. Determine the Export Control Classification Number (ECCN)
2. Check to see if your ECCN is on the Commerce Control List (CCL)
3. if your ECCN in not on the CCL then go to step 6
4. If your ECCN is on the CCL, then you need to further check for your ECCN on the Commerce Country Chart (CCC);
5. If your ECCN is on the CCC then determine the "ship to country" and "restriction type" - you will need an export license; go to step 7

6. If your ECCN is not on CCL or not on CCC use EAR99

7. Check for your customer on the Consolidated Screening List (CSL)
8. If not on CSL, EAR99 can ship as No License Required (NLR)
9. If your customer is on the CSL you CANNOT ship to them.

Ah, you say but my product is very simple and there is no way I should need an export license to export it. That might seem logical to you, but if your product has a "dual use", which means your product has both commercial and military or proliferation applications, then you need to do some more work before shipping. You need to determine your product's Export Control Classification Number (ECCN), check to see if it is on the Commerce Control List and if so further check the requirements and destination country on the Commerce Country Chart. If you need to get an export license remember that the license only applies to one shipment (transaction), so you need to get another new license for each shipment and licenses typically can take 20-30 days to get (which means that eCommerce won't work smoothly for export products requiring and export license.

Some examples of the not-so-logical nature of export licenses:

Paraffin (you know stuff in candles) can often require an export license depending on the buyer and destination country.

Horses shipped by sea, but not by air or land require an export license

Sony Playstation depending upon to where and to whom you ship can require an export license.

So forget the intuitive feeling that you don't need an export license and check before shipping.

Export Compliance probably has sneaked up on most exporters, and many exporters and potential exporters we talk to don't know what it is, what it means or why it's important. Yes, this is big and messy but also very necessary since 9/11, not only to prevent terrorist activities but also to keep exporters out of trouble.

Simplified bottom line is that exporters must know and carefully document:

What they are selling? (does it require an export license?)

Where they are shipping? (is the buyer or end user location in a prohibited or restricted country?)

To Whom are they shipping? (is the buyer or the end user on a US government Denied Parties List?)

What is the end users intended use for the product? (Probably don't know for sure must do due diligence to confirm use is legitimate).

Okay, many of you use commercial carriers and they do all of the shipping documents as a service, but you must know that they do that to protect themselves and not you. They do keep the archive records as long as they legally need to, but that doesn't necessarily protect you, the exporter, if there is ever a problem, because the shipper doesn't necessarily give you a complete copy of their compliance due diligence AND YOU need to keep a copy for 5 years.

New to Exporting probably means you need to start exporting with personal savings and investments

There really are a number of neat government programs to help you export, but unfortunately most of them require you to have at least one year of exporting experience, so in the beginning you may need to consider starting out by using personal savings and or investments. Or if your business already exists and you have established cash flow you may be able to redirect some the cash flow to invest in your new export program.

Naturally you might be able to get someone to invest in your export program, but in the beginning it may only be friends and family because experienced investors are not overly interested in an unproven business.

And this for SBA International Trade or Export loans:

• Export Express

  Provide exporters and lenders with a streamlined method of obtaining financing for loans and lines of credit up to $500,000. Lenders use their own credit decision process and loan documentation; exporters get access to their funds faster. SBA provides an expedited eligibility review with a response in less than 24 hours.

• Export Working Capital

  Offers loans targeted at businesses that are able to generate export sales but need additional working capital to support these opportunities.

• International Trade Loans

  Gives term loans that are designed for businesses that plan to start/continue exporting or those that that have been adversely affected by competition from imports. The proceeds of the loan must enable the borrower to be in a better position to compete.

So you did all that other stuff and now you are ready to start exporting, but what you really need to do is find some working funds to actually pay for everything until the money starts rolling in -- but how?

There are a number of options and strategies for getting International Trade financed and we will address them in this section:

Personal loans or investments

Investors

Bank loans

SBA loans

OPIC

Export-Import Bank financing (EX-IM Bank)

OPIC is NOT what you thought - (that is OPEC for Oil)

Overseas Private Investment Corporation (OPIC) does, among other things, Investment Project Financing: OPIC enables U.S. businesses to acquire financing for large-scale projects that require large amounts of capital, such as infrastructure, telecommunications, power, water, housing, airports, hotels, high-tech, financial services, and natural resource extraction industries.