While the US Department of Commerce (DOC) office in Milwaukee helps businesses connect with foreign markets every day, it only recently has started a particularly challenging initiative — working specifically to connect woman-owned and minority-owned businesses with export opportunities.
International trade is difficult enough for most companies, according to Paul Churchill, director of the Milwaukee DOC office, much less so for people who are already under-represented in the business community.
“They have a tough enough time doing business domestically,” Churchill said.
Churchill said that even given the challenges, taking a look at international trade makes sense for fledgling minority businesses — just as it makes sense for businesses as a whole.
“I looked at the community in Milwaukee — and if you look at the inner city and the businesses that have developed and grown, there has been a lot of activity and a lot of good things taking place,” Churchill said. “But it is important to have a solid base of economic activity. What happens when the economic swing goes down and they don’t have a diversified market base is that they have to lay people off. International trade gives you diversification. When the US is up, your overseas markets may be down. But when the US is down, they may be up.”
That approach makes sense to Sheila Payton, owner of advertising and public relations agency Sales & Marketing Associates of Milwaukee. Payton also owns Milwaukee Black Pages, a local business directory.
“I wanted to broaden my business base — that’s the main thing,” Payton said of her involvement in the program. “If you are investing in stocks, you don’t want to put all your eggs in one basket. This is an increasingly global economy, and participating is important regardless of the size of your business.”
Because many of the businesses participating in the DOC initiative are smaller one- and two-person start-ups, the question of whether it makes more sense to develop domestic markets first is a valid one, Churchill acknowledged.
“There are a couple schools of thought,” Churchill said. “There is a school of thought that you should establish your base in the US. That is very positive and a good way of going about the process. You still can work your domestic market but diversify and have your international presence. You can then avoid the swings that affect the domestic economy.”
The job of starting an export program aimed at such a small segment of the total state’s economy was tough enough that Churchill knew he and his skeleton crew couldn’t go it alone. He recruited Waukesha County Technical College, the Wisconsin World Trade Center and the Milwaukee World Trade Association to help in the effort.
Together, they tackled the question — how to get minority-owned businesses from Milwaukee into the international marketplace. The combined entity — International Minority Business Development Working Group — extended feelers through groups like the Hispanic Chamber of Commerce and the Metropolitan Milwaukee Association of Commerce and others to solicit input on the type of assistance minority-owned businesses needed to make the leap.
“We tried to get a representative base that could meet and discuss their needs and what could be done,” Churchill said. “But we didn’t just work through the associations. Because when you do that, you miss the businesses that aren’t members.”
In addition to working through organizations, Churchill’s team used direct mail and a mail forwarding service to reach minority-owned businesses.
“We sent a survey to minority businesses,” Churchill said. “We used the certified directory of minority businesses from the state. This is how we defined a base. We sent out 250 surveys and received 50 responses — and of those, 33 voiced interest in international trade. We visited every one of them to see what we could do. We are now doing the same thing for woman-owned businesses.”
Between the spring and fall of 2000, Churchill held three informal focus groups of minority business owners. From the in-person meetings and direct mail surveys, Churchill said he noticed two themes — two things DOC could do.
“The group wanted to be able to network within the community with people who have had experience in international trade and hear from people of color who have been involved in international trade,” Churchill said. “That is why, in March of 2000, we held the Minority Business Networking Conference. Total attendance was 45.”
The networking aspect of the program may already be paying off for Payton.
“At the last meeting, I did come in contact with a gentleman who has contacts in India,” Payton said. “He and I are going to talk about some companies that sell product they are trying to get into the United States.”
Businesspeople to whom Churchill and his team spoke also said they wanted some type of educational program to help them understand the various steps involved in plying the waters of international trade.
In order to deliver an educational program, DOC hooked up with Waukesha County Technical College to offer Working the World from Wisconsin — a 12-week program that covers topics from developing an international business plan to cultural differences to intellectual property rights and tariff issues.”
To date, 12 companies have enrolled in the program, which offers separate classes for service businesses and manufacturers.
Payton said the difference between service and manufacturing is key.
“Doing business internationally is harder for me as opposed to someone that manufactures something,” Payton said. “As a result, I am looking at helping companies from overseas that want to enter the US market as opposed to going somewhere like Zimbabwe to ply my services there.”
Sidebar — Tips on entering international markets from Paul Churchill
Paul Churchill, director of the U.S. Department of Commerce’s Milwaukee District office, offers the following tips for companies considering entering an international market.
“The greatest factor is sensitivity,” Churchill said. “Be sensitive to what the people you are working with are like and keep in mind that you are working towards a common goal.”
Churchill said those interested in international markets need to take three important steps:
1. Identify the market using the available data and information that will point you in the right direction.
2. Assess the market using data from local and federal resources.
3. Sell the market by identifying the right method. Decide whether to use representation or to sell direct.
—————–
sidebar — Kirchgeorg finds success overseas
According to Paul Churchill of the U.S. Department of Commerce in Milwaukee, most of the minority-owned businesses involved in the Work the World from Wisconsin program are small — and in the very preliminary stages of engaging in international trade. Many are only beginning to explore their domestic markets.
But one Milwaukee company has benefited immensely from working with the DOC only two years after opening its doors. Over a period of years, Life Corp. President John Kirchgeorg has watched as international shipments to everywhere from Asia to Europe to South America have grown to account for 50% of his sales.
Kirchgeorg left a career in finance to start Life Corp. in 1986, launching an innovative, easier-to-use wall-mounted oxygen tank for emergency use. He later launched a lightweight portable version of the product and a mouthpiece to prevent transmission of disease during mouth-to-mouth resuscitation.
Kirchgeorg credits Churchill with introducing him to the international market.
“It all started when Paul Churchill sold me on a $225 ad in US Commerce News,” Kirchgeorg said. “And the interest on the part of distributors from overseas started pouring in.”
Looking for help from outside is important for those interested in international trade, according to Kirchgeorg.
“I learned about facilities available at the Wisconsin Department of Development — things like foreign trade shows, governor’s missions and foreign market experts that guided me along with the help provided by the US DOC office,” Kirchgeorg said. “I became involved with Wisconsin World Trade Center (WWTC), where I discovered the delight of communicating with numerous other small and very large businesses about their international experience. This helped me develop our own international business program.”
Kirchgeorg now sits on WWTC’s board of directors.
“The biggest advantage of WWTC is the chance to talk to others in the same business and learn from their successes and mistakes,” Kirchgeorg said. “There is certainly a lot of professional advice available, but there is nothing like talking to the people who have done it themselves.”
Even small start-ups, according to Kirchgeorg, should take a good, hard look at international markets — with the understanding that his business which involves patented products might behave differently than those dealing with commodities or services.
“It seems unusual that a small company would become involved in international so soon after starting,” Kirchgeorg said. “But in fact, the reality is that it is the newness of the company that allowed us to become active in it right away. It is only a problem for companies that have been in existence a long time and need to break their habit and explore opportunities like international trade. It only seemed natural for us to be involved.”
Easier than you’d think
Kirchgeorg stresses that in many ways, international trade can be easier than domestic trade.
“When it comes to credit, these foreign partners are so dependent on you for supply of goods — their desire for USA-made products is such that your chances and risk factors may be greater domestically than they are overseas,” Kirchgeorg said. “Once you get used to it, the shipping and freight forwarding becomes just as repetitious and uncomplicated as domestic shipping. Most of the barriers are more perception than reality.”
In fact, international trade may have become easier in recent years.
“The problem was a great deal more difficult for people entering foreign trade prior to Desert Storm and the demise of the Soviet Union,” Kirchgeorg said. “Those two events abruptly brought elements of many foreign countries to focus on wanting to do business USA-style — Yankee style. Therefore, when we prescribed our terms, and we were reasonable, fair and practical, it made it easy for them to conform to our trade procedures. At the same time, we were sensitive to notable cultural differences.”
Naturally, cultural differences between nations can be a complication — but these differences can be resolved.
“It is important to understand cultural differences in order to gain the respect for your own business approach,” Kirchgeorg said. “We had been shipping on a very substantial order and letter of credit from Japan when their requests suddenly stopped. I was fortunate in that an expert in Japanese culture asked me when I had visited Japan or when they had visited me. I said I had never met them. On his advice, I immediately jumped on a plane to Japan and the flow of orders continued to immediately follow. It is culturally impossible for a Japanese businessperson to do business without personally meeting the other side.”
But Kirchgeorg stresses that differences between nations can be considered comparable to regional differences in attitude within the United States.
“Rather than emphasize cultural differences, I consider it the same as any human intercourse,” Kirchgeorg said. “Sometimes we spend time gaining the perspective of the other side when establishing a relationship.”
sidebar — Staff a possible international connection for Edwards & Associates
One participant in the Working the World from Wisconsin program — engineering consultant Edwards & Associates of Milwaukee — sees potential international opportunity in recently hired engineers from abroad.
But while recent hires might have insights into markets in their homelands, competitive and market pressures still need to be looked at.
“The need for the work we do in transportation design and road design is certainly there in the international market,” Edwards and Associates Vice President Bruce Spann said. “Certainly the first step is identifying that there is a market there. In many of the developing countries, there is a need — but we need to make sure we can compete with local firms and other US firms that already have a presence there. If we can find a market where we might not have a monopoly but have a unique situation, we are in a better position to succeed.”
While the potential for international work was not a factor in hiring two recent engineers, Spann looks forward to exploring the connections they could provide overseas.
“We have a couple of people who are on staff from other parts of the world,” Spann said. “They might be able to help us with their respective countries in securing work. We have on staff one young lady from South Africa. She is presently pursuing her PhD through UW-Milwaukee. She needs to do research for her dissertation, and felt she would probably be most comfortable doing research in her homeland. And while she is there, we can find out if there is potential to open an office or make connections with the right people. Another young man recently joined us — he came here from Moldova — part of the former Soviet Union near Italy. He, too, is a degreed engineer — and has three years’ experience in his homeland. Maybe there is a chance for us to go there and provide service with him.”
If an international market for the firm does materialize, according to Spann, it will not take place overnight.
“We are learning more through the course we are participating in,” Spann said. “We anticipate a two- to three-year horizon. So we see late 2003 or 2004 as a reasonable timeframe within which we would see that there is an opportunity.”
Two years might be an appropriate timeframe to make the transition. Currently, Spann and his firm work for government entities in Wisconsin — a long way from moving in international circles.
“Presently, we do a lot of state work — nearly all of our work is in the public sector,” Spann said. “We either provide engineering or construction management services as a prime or a sub to other consultants on Wisconsin Department of Transportation (DOT) projects and projects for local counties in southeastern Wisconsin. We also work for the City of Milwaukee and Milwaukee Metropolitan Sewerage District.”
Edwards & Associates is the prime engineering contractor for the DOT’s Fond du Lac Avenue corridor (Highway 145) project in Milwaukee, Spann said.
“We are now learning how to communicate and how the other countries go about doing business — this is critical,” Spann said. “We need to examine each government and its stability. I guess we are more optimistic in South Africa as opposed to Eastern Europe.”
In part, this preference is driven by a lack of knowledge about Eastern Europe, Spann said.
“My ignorance right now is that I do not know as much about that part of Europe,” Spann said. “With things being as they are since Sept. 11, people are taking a second look at things. I am a little less desirous of traveling abroad than I might have been before Sept. 11.”
February 15, 2002 Small Business Times, Milwaukee
