Where small and midsized companies can find export help; a number of government agencies have programs to assist in all phases of exporting.

If the myth that the export market was largely the province of giant multinational corporations and high-tech companies was ever true, it has long since been disproven. Most U.S. companies, whatever their size, can export profitably. According to the Small Business Administration, 25% of the companies that exported in 1988 had fewer than 100 employees, some had less than $100,000 in annual sales and high-tech companies were in the minority. But exporting has worked out well for these small businesses. A Dun and Bradstreet survey of small exporters found 41% reported export sales growth exceeded domestic sales growth and 23% had increased export sales by 20% to 49% in the past year.

However, for a small company with a limited staff, success in global markets depends heavily on obtaining the right advice and support. CPAs, traditionally the chief financial adviser5s for small and midsized companies, are in a position to recognize where help is most needed and recommend appropriate action. To help CPAs assist clients interested in exporting, this article summarizes many of the export programs available for small businesses.

SELECTING THE RIGHT MARKETING

APPROACH

Small and midsized businesses new to exporting generally find it easier and more cost-effective to market through an intermediary, at least at the outset. When they are more familiar with the foreign market, they can consider a direct export sales effort through an international department or a joint venture arrangement.

* Marketing help in the United States. Several types of export service companies offer different levels of assistance and fees in marketing a product or service abroad. The correct choice for a specific exporter depends on the company's overseas marketing plan and the services required to implement it.

Brokers and agents set up specific deals with international buyers. Usually, these brokers have small staffs with industry contacts in one or more countries. Some provide consulting services on documentation, labeling and packaging, but much is left to the customer.

Export management companies (EMCs) are similar to brokers but have larger staffs to arrange the details of financing and shipping, which can became extremely complex. They usually specialize in a particular product group or country.

Export trading companies (ETCs) actually take title to the goods and pay the exporter directly, unlike brokers or EMCs. These are usually large companies that handle a variety of products with the backing of a bank or port authority. They sometimes handle competitive products.

EMCs and ETCs are listed by area and cross-referenced by product specialty in a Department of Commerce publication, Partners in Export Trade, available at $11 per copy from the Government Printing Office, Superintendent of Documents, Washington, D.C. 20402; phone: [phone]. Refer to GPO: 003-009-00523-0.

* Marketing help overseas. Two broad types of overseas marketing representatives are available to an exporter. A foreign agent is similar to a manufacturer's representative in this country. The agent becomes the exporter's sales representative in a given area, working on commission. Even though it is reasonable to assume a foreign representative would be a more effective selling agent in an overseas market than would a U.S.-based company, an exporter should realize that there are risks involved. Assembling a network of overseas agents is much more difficult than engaging a domestic company. Also, an exporter needs to be aware of local laws when employing an overseas agent. Should the agent not perform up to standard, some countries' laws will still protect the agent over the U.S. company's interests.

A foreign distributor can either buy the goods from the exporter outright or sell them on commission. Either way, the distributor stocks them in inventory, shares in the marketing, handles the servicing and extends credit to the customers. Since foreign customers often will identify the exporter's product with the overseas distributor, selecting one with a solid record fo customer service is very important.

To identify overseas representatives who might be interested in representing a particular U.S. company, the U.S. & Foreign Commercial Service (US&FCS), an arm of the Department of Commerce, will conduct a customized search for qualified foreign representatives based on the exporter's literature. The search will identify up to six interested prospects for a fee of $125. For further information, call [phone].

In addition, the Standard Handbook of Industrial Distributors contains an analysis of leading distributors, agents and representatives in more than 90 countries. It' available in most commercial libraries or can be purchased for $95 from Bergamo Book Company, P.O. Box 190, Fairfield, Connecticut 08430. Phone: [phone]. Refer to ISBN: 917408-20-0.

EXPORT FINANCING HELP

Many U.S. banks are unwilling to assume the additional risks involved in export financing for small companies, for which they must assume the political and monetary risks of the country where the buyer is located] as well as the usual financial risks of the seller and the buyer. Several government agencies have sought to ease the burden on exporters, particularly small and midsized companies, with loan guarantees that cover many phases of exporting.

* The Export-Import Bank of the United States (Eximbank). This bank offers a wide spectrum of business loans and loan guarantees for smaller businesses. Its working capital guarantee program gives lenders a guarantee on loans made to support pre-export expenses, such as production for inventory earmarked for a specific overseas market. Eximbank also offers direct loans and loan guarantees for financing U.S. export sales, extends loans to foreign buyers of U.S. exports and funds responsible parties that extend loans to foreign buyers. Its small business intermediary loan program permits commercial banks to grant fixed-rate export loans of up to $2.5 million to small and midsized companies for as long as seven years.

Eximbank is located at 811 Vermont Avenue, NW, Washington, D.C. 20571. Phone: [phone] or [phone].

* The SBA. The agency has an export revolving line of credit program that guarantees loans of as much as $750,000 for export-related activities (up to 90% of the first $155,000 of a line of credit extended by a bank and 85% above that amount). The maximum maturity is 18 months.

The SBA and Eximbank also have a joint guarantee program for small business exporters and export trading companies. The guarantees apply to 85% of loans ranging from $200,000 to $1 million.

The SBA has 107 regional, district and branch offices across the country. Its headquarters is located at 1441 L Street, NW, Washington, D.C. 20416. The Small Business Answer Desk can be reached at [phone] or [phone].

* Overseas Private Investment Corporation (OPIC). To promote growth in developing countries, OPIC encourages U.S. private investment in them. It finances equity investments in international projects through loan guarantees and direct loans involving small to midsized companies, typically ranging from $250,000 to $6 million. To introduce U.S. business owners to key overseas business leaders, government officials and potential venture partners, OPIC conducts periodic investment missions to developing countries of interest.

OPIC is located at 1615 M Street, NW, Washington, D.C. 20527. Phone: [phone] or [phone].

EXPORT INSURANCE

Export credit insurance covers both political losses resulting from conditions such as war, expropriation and currency inconvertibility and commercial losses resulting from insolvency or default. Adequate export insurance coverage allows an exporter to extend credit to foreign buyers on competitive terms and also encourages banks to finance the exporter's receivables.

* The Foreign Credit Insurance Association (FCIA). An association of leading U.S. insurance companies acting as an Eximbank agent to provide export credit insurance, the FCIA offers two policy lines aimed directly at small and midsized businesses. A new-to-export policy insurers companies whose export credit sales were under $750,000 annually in the last two years and those that have not previously used Eximbank or FCIA insurance. Another umbrella policy covers companies with limited export experience. To be eligible, a company cannot have export sales exceeding $2 million for the past two years, nor can it have used FCIA insurance during that time.

Exporters can obtain FCIA policies through their local insurance brokers or contact the FCIA directly at 40 Rector Street, New York, New York 10006. Phone: [phone].

* OPIC insurance. OPIC insures investments made in its overseas projects against a variety of political risks such as war, revolution, insurrection, civil strife, expropriation and inconvertibility and against the loss of business income due to political violence or expropriation. However, it does not insure against commercial risks.

EXPORT COUNSELING

To further promote export trade, many government agencies also provide counseling, often on a one-to-one basis. Here's a brief look at some counseling programs.

* The International Trade Association (ITA). This arm of the Commerce Department provides one-on-one counseling by international trade specialists at each of the branch offices of the US&FCS. The ITA also schedules walk-in appointments at its Washington, D.C., branch, located at 14th Street and Constitution Avenue, NW, Washington, D.C. 20230. Phone: [phone].

* The SBA. The SBA provides one-on-one export advice at its regional and district offices. It also cosponsors export training programs with the Commerce Department and other federal agencies and offers free initial consultations on the legal aspects of exporting.

* Other sources of assistance. Many states have active export programs, sometimes administered in conjunction with federal agencies. Help also is available from the private sector. For instance, the U.S. Council for International Business, the U.S. arm of the International Chamber of Commerce, administers the ICC's ATA carnet system (a carnet is a specialized customs document that permits business executives to move commercial samples and technical material through customs with a minimum of difficulty). The council is located at 1212 Avenue of the Americas, New York, New York 10036. Phone: [phone]. The 4merican Association of Exporters and Importers (11 West 42nd Street, New York, New York 10036; phone: [phone]) provides advice, research and support on export problems, and the Foreign Credit Interchange Bureau, the international division of the National Association of Credit Managers, provides credit reports and collection experience on foreign countries, regions and companies.

SUPPORT WHEN NEEDED

For a small company with limited resources, a move into a global market can be daunting, no matter how attractive the potential may be. But fledgling exporters need not go it alone. To reduce the risk, extra resources are available at every step along the way, including counseling, marketing support, financial assistance and insurance coverage. Thus, even a small company can assemble a team of experts to plan export strategies. CPAs should be certain clients and companies are aware this valuable help is available before they decide to export.

GENE R. BARRETT is a news editor of the Journal.

Mr. Barrett is an employee of the American Institute of CPAs. His views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.