From Daunting Challenge to Competitive Advantage: UPS Helps Small Businesses Grow by Going Global
THE BIG IMPACT OF SMALL BUSINESS
Small businesses play a big role in global trade. In the United States, approximately 97 percent of all exporters are small businesses - and more than two-thirds of all U.S. exporters have fewer than 20 employees. Together, small businesses account for approximately 26 percent of the nation's total export value. 1
Yet as huge as these numbers sound, small businesses are just scratching the surface of opportunity. Only 1.8 percent of small-to-mid-sized companies export goods or services.2 And when they do, the U.S. International Trade Administration reports that nearly two-thirds (62 percent) of small-to-mid-sized companies export to one international market only. In contrast, 52 percent of large firms export to five or more markets.3
A major reason for this discrepancy is that small businesses simply don't have the global presence or resources to overcome trade barriers. It's estimated that the typical cross-border transaction involves filing 35 documents, interfacing with 25 parties and complying with more than 600 laws and 500 trade agreements. Getting through all of this can seem insurmountable to small businesses. In fact, a study commissioned by the U.S. Small Business Administration found that logistics complexities associated with global trade is a major obstacle for small businesses striving to spread their wings globally.4
That's where a partner such as UPS can help businesses navigate these challenges to prosper on the world stage. And if they do, the payoff can be well worth it. The Small Business Administration found that companies engaged in international trade are 20 percent more productive, have 20 percent greater job growth than non-exporters and are nine percent more likely to stay financially solvent. They may even find opportunity where they least expect it. For example, China is the fastest-growing export market for small businesses, with small-to-mid-sized companies exporting $9.3 billion of merchandise there in 2003.5
GIVING SMALL BUSINESSES A BIG, GLOBAL PRESENCE
The majority of UPS customers are small businesses, and many of them rely on UPS to help them build the global presence more typical of larger firms. Here are some of UPS's myriad, cost-effective ways to help small businesses grow globally.
Unmatched Worldwide Network: UPS delivers more packages to more places than any other carrier. Every day, UPS delivers 14.8 million packages, working with customs regulations in more than 200 countries and territories to make these deliveries seamless. With an unmatched global network that includes the world's 8th largest airline, UPS can move shipments large and small by land, sea or air to almost anyplace in the world. There are many ways for small businesses to access this network, from daily distribution center pick-ups to the more than 5,700 The UPS Store®/Mail Boxes, Etc.® locations around the world.
Technology that Simplifies Shipping: With up-to-the-minute information about their goods, businesses can handle inventory better and control costs. UPS offers a range of proprietary technology to help companies, from Web site embedded tools for managing online orders, to software that helps businesses with every step of the shipping process.
Information Businesses Need: UPS offers small businesses the information they need to stay ahead of their global expansion. Through UPS technology, businesses can track the location of their orders, research international markets and business costs, and calculate total shipping costs - including duties, taxes and transportation charges - ahead of time.
Financial Services to Help Global Expansion: Small businesses can gain resources they need and minimize risks as they spread their global wings through services from UPS CapitalSM, the company's financial services arm. UPS Capital offers small business loans, lines of credit and payment processes that help speed up payment and alleviate the risk associated with dealing with new customers.
Streamlined Logistics for More Efficient Delivery: Consolidating international shipments saves time and money. UPS offers a service that enables businesses to send multiple shipments of nearly any size to many destinations within the same country as one single, consolidated shipment. This allows goods to be expedited through customs, reducing processing time and minimizing costs associated with warehousing, inventory management and shipping.
BIG RESULTS WITH THE RIGHT STYLE
Many small businesses have broken through the challenges of international commerce with UPS's range of services. Here are some of their stories:
Shipping in Style: Tomer
Designer Tomer Gendler and his staff of four rely on UPS to transport designs, fabric and clothing to create the label's renowned line of upscale menswear. UPS's range of services, from ground delivery to UPS Worldwide ExpressSM, ships fabric and trim - such as cashmere blends from Italy, high-tech fabrics from Switzerland and buttons from China - to New York, where Tomer creates samples for fashion buyers. Once the collection is finalized, UPS ships the patterns, fabric and trim to seamstresses in New York and Italy. UPS's customs brokerage services take care of complex tariffs associated with importing textiles so that each component clears inspections seamlessly. Once the clothes have been made, they are shipped to Tomer's New York showroom for quality inspections, and then to customers around the world.
The Right Shipping Prescription: Las Colinas Pharmacy
When its skincare products were featured on the hit “Dr. Phil” television show, family-run Las Colinas Pharmacy got more orders than the small business could handle. So UPS stepped in with a remedy. UPS integrated UPS OnLine® Tools into the company's Web site, so customers can choose the UPS delivery method they want and track orders online. All orders are managed internally with UPS WorldShip® software, and UPS Quantum View NotifySM alerts Las Colinas Pharmacy and its customers via e-mail when a package is processed, when it's in transit and when it arrives. Finally, UPS helped curtail spiraling international order costs. Initially, each individual international shipment cost Las Colinas Pharmacy $20 dollars in customs brokerage fees. In Canada, the company's largest market outside the United States, UPS now consolidates packages, clears them as one shipment and then transports them over the border using UPS World EaseSM. Las Colinas Pharmacy reduced its brokerage fees to $1 or less per shipment.
Setting Global Commerce on Fire: Jetboil®
New Hampshire-based Jetboil has transformed traditional campfire cooking into a multi-million dollar business. Sales of the company's personal stoves, which boil water within one minute, are in hot demand from retailers in the United States and around the world. So Jetboil relies on a range of UPS services to transport the stoves' designs from New Hampshire to manufacturers in China, and then deliver the finished products on direct flights from China to retailers including REI® in the United States, the United Kingdom, Sweden, Hong Kong and Japan. Throughout the process, Jetboil relies on UPS Quantum ViewSMManage to provide visibility to all of its inbound and outbound shipments, so Jetboil staff can tell its customers where shipments are at any time. And with UPS WorldShip software, employees save time and cut down on errors by simply pointing and clicking to calculate shipping costs, prepare customs forms and generate labels automatically.
Defeating a Giant Logistics Obstacle: David & Goliath®
With 40 employees, this Florida-based small business has made it big with its line of edgy t-shirts and other merchandise. Although the company sells its products through stores, its Internet sales are booming, and as many as 300 orders a day can come in from far-flung corners of the globe including Bulgaria, Russia, Japan and Taiwan. Company staff used to spend hours a day taking orders to the post office. Not only was this time consuming, but it also was expensive. With no tracking, up to 30 percent of packages were lost, so the company had to replace them or refund customers. It also took up to eight weeks for packages to reach some countries. But now with UPS Worldwide Express, orders arrive anywhere in the world within a few days. Customers can just log onto UPS.com to track their orders. And with UPS WorldShip software, David & Goliath staffers just go to their computers to create shipping forms automatically, rather than fill out lengthy customs forms. The end result has made customers happy and saved the company time and money.
Hitting the Right Financial Note: Larrivée® Guitars Ltd.
From a 33,000 sq. ft. facility in Vancouver, Larrivée Guitars Ltd. sells its premier line of satin-finished six-strings to specialty retailers internationally. But shipping cost-effectively - and getting paid within a reasonable timeframe — wasn't always easy. Approximately 25 percent of its U.S. customers paid Cash On Delivery, which set off a complex process that involved sending checks to Canada, depositing funds and waiting up to six weeks for the funds to clear. Worse than that, Larrivée wouldn't know for weeks when retailers' checks were returned, so Larrivée would continue shipping guitars, only to find out later that some retailers couldn't pay. But UPS Capital's C.O.D. Automatic has solved the problem. Here's how: When a UPS driver arrives with the guitars, he or she picks up a check for the goods. UPS Capital deposits the check into the UPS Capital bank account and then electronically transfers the funds into the Larrivée Guitars Ltd. bank account — usually within three to four business days. The end result: faster payment, with less risk.
For more information about how UPS helps small business, please visit www.ups.com/smallbiz
- Small and Medium-Sized Export Companies: A Statistical Handbook. Results from the Exporter Database. U.S. Department of Commerce. International Trade Administration. Manufacturing and Services. Office of Trade and Industry Information. June, 2005.
- Exporting by Firm Size. U.S. Small Business Administration. March, 1998. http://www.sba.gov/advo/stats/exp_rpt.pdf
- Small and Medium-Sized Export Companies: A Statistical Handbook. Results from the Exporter Database. U.S. Department of Commerce. International Trade Administration. Manufacturing and Services. Office of Trade and Industry Information. June, 2005.
- Cost of Developing a Foreign Market for Small Business: The Market and Non-Market Barriers to Exporting by Small Firms. Palmetto Consulting, Inc. for the U.S. Small Business Administration. Nov. 2004. http://www.sba.gov/advo/research/rs241.pdf
- The Role of Small and Medium Sized Enterprises in Exports to China: A Statistical Profile. Results from the 2003 Statistical Database.U.S. Department of Commerce. International Trade Administration. Manufacturing and Services. Office of Trade and Industry Information. June, 2005.
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