Taking a small business international
Selling abroad can open markets many times larger than your own, but it adds paperwork, payment risk and rules you may never have dealt with. Getting the basics right in your first market makes every later one easier.
Choose a first market
Start where demand already shows up. Orders, inquiries or website visits from a country are better evidence than a market’s size. Then weigh how easy it is to serve: shared language, shipping distance, product rules, payment habits and whether a U.S. free trade agreement lowers tariffs.
The U.S. Commercial Service publishes Country Commercial Guides that summarize market conditions, regulations and business customs for many countries. Pick one market, learn it well and expand from there.
Pick a way to sell
Each channel trades control against cost and risk.
Before signing with a partner or licensee, register your trademark in the target country, because many countries give rights to whoever files first. Have a local lawyer review exclusivity and termination clauses, since some countries protect agents and distributors when a supplier ends the relationship.
- Direct export: you sell to foreign customers yourself and keep the margin and the relationships.
- Distributors and agents: a local partner resells your goods or finds buyers, in exchange for a margin or commission.
- Online marketplaces: cross-border platforms reach buyers quickly but set their own fees and rules.
- Licensing: a foreign company makes or sells your product under license and pays you royalties.
Learn the export basics
Incoterms rules, published by the International Chamber of Commerce, set where delivery happens, who pays for freight and insurance, and when risk passes to the buyer. Under EXW the buyer handles nearly everything, while under DDP the seller delivers and pays import duties. Name the rule, the place and the edition in every contract, for example FCA Chicago Incoterms 2020.
Classify each product with a Schedule B number, the U.S. export code whose first six digits follow the international Harmonized System that customs offices worldwide use. Check whether the Export Administration Regulations require a license for your item, destination or buyer, and screen every buyer against restricted-party lists, including those kept by the Treasury Department’s Office of Foreign Assets Control.
Electronic Export Information is filed through the Automated Export System for many shipments, generally when goods under one Schedule B number are worth more than $2,500 or need a license, though most shipments to Canada are exempt. A freight forwarder can file it for you, but you remain responsible for the accuracy of the information you provide.
Get paid and manage currency risk
Payment terms range from cash in advance, safest for you, to open account, where you ship first and invoice later, which buyers prefer and which carries the most risk. A letter of credit sits between them: a bank promises to pay once you present documents that match its terms exactly, so small discrepancies can delay payment. Export credit insurance can protect open account sales.
Pricing in U.S. dollars moves currency risk to your buyer, though some buyers will choose a competitor who bills in their currency. If you invoice in a foreign currency, a forward contract from your bank can lock in an exchange rate for a future payment.
Plan for taxes abroad
Most countries charge a value-added tax or goods and services tax on imports and many sales, and some require foreign online sellers to register and collect it, occasionally from the first sale. Customs duties depend on the product’s classification and origin, and the party your Incoterms rule makes responsible for import clearance usually pays them.
Watch for permanent establishment risk. A fixed office abroad, or employees or agents there who regularly conclude contracts on your behalf, can make your company taxable in that country under its law and any tax treaty with the United States.
Hire people abroad
An employer of record is a company that legally employs your worker in their country, running payroll, taxes, benefits and local compliance while you direct the work. It is usually the fastest way to hire a few people, though per-person fees add up and it doesn’t remove every tax risk.
A local entity, such as a subsidiary, gives you more control and scales better for larger teams, but it means registration, local accounting, annual filings and closing costs if you leave. Treating foreign workers as contractors when they function as employees can break local labor law, just as it can in the United States.
Localize and use public export help
Localization is more than translation. Adjust labels, units, sizes, plugs, safety marks such as the EU’s CE marking where it applies, payment methods, return policies and customer service hours. Privacy laws such as the EU’s General Data Protection Regulation can apply to you if you sell to people there.
Public programs exist to help. The U.S. Commercial Service, part of the Commerce Department’s International Trade Administration, offers market research and partner searches through offices across the country and in U.S. embassies. The SBA runs export loan programs and supports State Trade Expansion Program grants offered by many states, and the Export-Import Bank of the United States provides export credit insurance and working capital loan guarantees.