U.S. Should Tap Small-Business Owners to Help Close Trade Gap, SBA Head Says
The United States must enlist the small-business community’s untapped ability to export products to close the gaping foreign trade deficit, the head of the Small Business Administration told a gathering of business people in Anaheim on Wednesday.
“We want to reach out to small-business owners who are interested in exporting,” James Abdnor told about 200 representatives of 150 Southern California businesses.
As part of a series of workshops aimed at helping small businesses overcome the governmental red tape and cultural barriers to selling products abroad, Abdnor urged Southern Californian entrepreneurs to meet the challenge of foreign competition in the Far East.
“These people are competitive and going after sales everywhere,” he said. “They are especially targeting America.
“In return, it is imperative that Americans, and especially our small- and middle-sized businesses, become active and involved in world trade,” Abdnor said. Before joining the SBA, Abdnor served as a U.S. senator from South Dakota from 1981 to 1987.
The U.S. trade deficit in 1987 reached a record $171 billion, contrasted with $156 billion in 1986.
Abdnor noted that 250 corporations in the United States account for fully 80% of U.S. exports.
“We want these corporations to continue exporting, but their huge share clearly demonstrates that in a country as great as America we can do a much better job in getting small firms involved in international markets,” Abdnor said at the two-day workshop at the Disneyland Hotel.
The SBA defines any business with fewer than 500 people as a small firm. There are roughly 18 million small firms in the country today, but only a tiny fraction of those sell their products overseas, Abdnor said. For every $1 billion of goods and services sold overseas, 25,000 new jobs are created, he added.
Securing markets overseas is never an easy task, and for the small businessman the obstacles can seem overwhelming: language and cultural barriers, dealing in a foreign currency, strange laws and regulations and lack of business contacts, to name a few.
Perhaps the biggest roadblocks are obtaining financing, since commercial banks are increasingly reluctant to do any sort of overseas lending, and simply finding a way to ship products. Then there is the problem of getting paid from a buyer thousands of miles away.
“These factors can be very complicated and discouraging,” Abdnor said. “But all of these obstacles are overcome by businesses of other nations every day, and they should not stop our small firms from getting into the export business.”
To help out small companies in their exporting efforts, the SBA has enlisted the help of the Export-Import Bank, the Commerce Department, the city of Los Angeles’ Economic Development Office, as well as several other government and private trade organizations to participate in workshops intended to walk would-be exporters through the steps of selling overseas.
At one of the two dozen workshops offered Wednesday, Arthur J. Obester of the Export-Import Bank told how to get low-interest loans for export purposes directly through a program jointly administered by the city of Los Angeles and the bank. Businesses within a 60-mile radius of downtown Los Angeles are eligible to apply for the loans, as well as for political risk insurance in the event of war or revolution, he said.
At a workshop called “Identifying Your Market,” William Filbert, president of International Diversified Technologies Inc., based in Anaheim, warned of the time and financial resources needed to secure an exporting niche. “Don’t get into the exporting business because you think you may like international travel. Do it because you want to be a successful international trader,” he said.
Filbert, whose firm exports electronic and computer parts, has developed a side business of helping other Orange County businesses obtain exporting licenses and also giving advice on overall exporting strategy. The key to success, Filbert said, is developing close ties with overseas distributors and suppliers, and that takes time. “You have to make a commitment, and it will take a lot longer than you think,” said Filbert, who said it took his business 10 years to become successful.
Several Orange County firms have already obtained financing, loan guarantees or other assistance through SBA programs and the Export-Import Bank, forum officials said. They include Linklater, a Costa Mesa manufacturer of oxide, a component in batteries, which secured a $200,000 loan from the California Export Finance Program in conjunction with the Export-Import Bank, and Dietronic Stampings, a computer parts manufacturer based in Irvine.
