You're Nothing Without Your Distributor

Don't send your product to just anyone.
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Editor's note: Business-management counselors at nonprofit organization Score have given free advice to small-business clients spanning every industry since 1964. They currently serve nearly 400,000 entrepreneurs nationwide each year. Check in every week for their prudent advice.

Exporting isn't just for

General Motors

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and

Anheuser-Busch

(BUD) - Get Report

anymore.

Roughly two-thirds of of current U.S. exporters have fewer than 20 employees, according to government statistics. A weakening dollar and free trade agreements with countries like Australia, Chile, Israel and Singapore mean that exporting is cost-efficient as well.

The little guys are getting cheeky, but all they need is one nasty foreign company ripping them off to be reminded: In the export world, you're only as good as a trusted distributor.

The Search Is On

So where do you find this entity that will safely shuttle your product -- the backbone of your business -- into the markets of a foreign country?

At best, potential partners approach you via the Internet or at a trade event. At worst, you're scouring the Internet in hopes of finding someone honest, says Joel Reynoso, senior international trade specialist for the U.S. Commercial Services branch of the U.S. Department of Commerce.

Robin Stein, founder and co-owner of

PortaMEe, is now selecting two overseas distributors. Her company, which designs high-end child carriers, needs to export to expand its client base.

Stein has been approached online by at least a dozen potential partners from Belgium, Canada, the U.K. and even Singapore, but plans on staying with Canada and European Union countries because of their highly mobile cultures. "Plus, Europeans and Canadians receive more time for maternity leave," she says.

If you don't have distributors knocking down your door, try starting with online resources such as

Export.gov, where you can get information on major markets and tariff rates. U.S. Commercial Services conducts partner searches and offers market research on overseas industry sectors for free.

ScoreNY counselor Harry Dannenberg recommends visiting your industry's international trade association for basic guidance.

Face Time

Whether you're sending CDs to Morocco or tractor trailers to Norway, make sure you can trust your distributer, says Reynoso. "The most common mistake is not doing enough due diligence," he says. No matter what you're sending across borders, Reynoso recommends building trust by meeting the distributor in person.

For those who don't have time to globe-trot, organizations like U.S. Commercial Services provide overseas specialists who will visit a potential distributor for you. Their service fees range between $600 and $800.

Got Connections?

For Stein, who has already met a few distributors, shipping a container -- or 1,980 cubic feet -- of product is a sizeable investment for all parties involved. She has to be certain she can trust her distributor not only with the physical product, but with her brand's image.

"We're a baby-carrier business leaning toward the up market," she explains. "We want to make sure our product isn't undercut from a price and distribution perspective."

The right retailers are key to building brand recognition in a new country, says Stein. She looks for distributors that have established relationships with her target retailers. "It's not like you have to knock on a lot of doors," she says.

Reynoso does recommend knocking on the doors of a prospective distributor's client base and asking them for references. If nobody answers, take that as a warning.

Because You Can't Sue

"Working with a distributor is a gamble, like anything in business," says Stein. Just avoid not getting paid.

You might not even be able to sue for missing payment because U.S. laws may not apply overseas, cautions Reynoso, so make sure your contract clearly states when and how your company will get paid before you send out the first shipment.

A colleague of Stein's pays their distributor in increments as each step of the exporting process is completed. "This way you have some leverage and it's not all or nothing," says Stein.

Don't behave like a tourist; Take the time to get to know your foreign trade partners, because they're handling your most valuable cargo.