Overseas Business Daunting
In the rush to go global, many entrepreneurs fail to understand just how risky it is to do business on foreign soil.
“It’s a very tough environment. It’s not like doing business in the United States,” said Michael Koulouroudis, president of Koudis International in New York City. “You have to learn by losing, in many cases.”
Koulouroudis, who exports fish farming equipment to Greece, Italy, Tunisia, Spain and France, spent two years learning how to be an exporter at the World Trade Institute. His business has grown to about $1 million in sales since 1992.
The Institute, located on the 55th floor of the World Trade Center, was acquired in July by Pace University, which has been expanding its training programs for entrepreneurs.
“We have lots of programs on importing, exporting, freight forwarding and international transportation,” said Lorrie Foster, senior director of programs at WTI.
“In the spring, we’ll be putting many of these courses on the Internet, so people around the world can take advantage of them.”
About 1,000 people a year sign up for WTI classes, which cost about $400 for 10 sessions. The online classes will be able to serve thousands more, Foster said. (For course information call: (888) 722-3984 or write to: World Trade Institute, 1 World Trade Center, 55th Floor, New York, NY 10048.)
While making deals overseas may seem like the most daunting challenge for a small-business owner, it’s not.
“It all comes back to the risk you face of not getting paid,” said George Henderson, president and chief operating officer of Chadwick International Inc. in Fairfax, Va.
Henderson learned all about the financial risks of international trade by working for the Export-Import Bank for 20 years. The government-run bank provides a variety of financial services and loan guarantees to U.S. businesses doing business overseas.
In 1991, he and Chadwick chairman, Ronald Nocera, began selling prefabricated housing to developing nations, such as Algeria. Chadwick designs the housing to meet local needs, builds modules in Florida and ships them in pieces on specially designed cargo ships.
“There’s no country that doesn’t need some form of housing, so we’re received with open arms,” said Henderson.
The company, which Henderson said has projects worth $130 million in 1997, not only builds affordable housing but provides attractive financing packages for foreign clients and governments. The financing packages, provided by a variety of banks, includes affordable interest rates. Chadwick packages the loans in $10 million increments and sells them to financial institutions.
Henderson’s solid experience in export financing provides a comfort level to the banks and financial institutions that purchase the loans. Bankers familiar with Chadwick say the company’s track record in dealing with foreign governments and its ability to obtain loan guarantees from the Ex-Im Bank increases their confidence.
Chadwick is popular with foreign governments because it provides hundreds of construction jobs for local workers who are initially supervised by American managers.
“It’s as hard as it can be,” admits Henderson. “But the opportunities are in the difficult places. That’s where the business is.”
One good way to minimize your risks when doing business abroad is to purchase the right kind of business insurance.
“It’s difficult enough to run a business in the U.S.; it’s virtually impossible to keep up with the worldwide rules and regulations,” said Jeff Brown, national manager for general insurance for The Chubb Group of Insurance Companies in Warren, N.J.
Chubb and other major insurers offer a variety of insurance policies designed to protect U.S. businesses doing business overseas.
In addition to insurance that protects your cargo at sea, you can buy international product liability insurance. This protects you if an overseas customer files suit against your company based on problems with your product or service.
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