Scott Szwast: The global business next door

>> I want you to
do something.

I'd like you to
take a moment and

visualize a successful

international business.

Picture of the
company that you

believe best epitomizes
global trade.

Did you picture a global

multi-national
conglomerate?

One of the world's
largest corporations,

Global 100 or the like.

How about one of the
companies actually has

the word
international baked

right into their name,

maybe IBM, AIG, or ING.

Is it one of the global
brands that you see

when you travel
overseas everywhere?

Subway, KFC or
7-Eleven for example.

Or maybe the Gap,

which is now a
familiar sight

all around the world.

How many of you pictured

a small business with

fewer than 50 employees?

One with only a
single location,

a family-owned and
operated business.

This isn't what
springs to mind for

most people when they think

about international trade.

But the fact is that
over 98 percent of

exporters are small

and medium-size businesses.

In the United States alone,

that's over 269,000 local

businesses that

have successfully
gone global.

For the past 25 years,

I've been working with

companies as they enter

and expand into
foreign markets,

and they really
aren't who you

think they are.
What are they like?

Who are they and
what do they sell?

More importantly,
what can all of

the companies that
haven't yet gone global,

learn from their example?

Back in 1996, the
Millionaire Next Door

was a surprise
hit on the New

York Times bestseller list.

It totally challenged
our perception about

who the affluent
really are.

We learned that the
wealthy weren't really

much like Blake Carrington,

the oil tycoon from the
1980s TV hit Dynasty.

Or his 21st-century
equivalent,

Lucius Lyon from Empire.

Actual millionaires
turned out to be far

more like modern
families, J. Pritchard,

the people that we see in

our neighborhoods
every day,

predominantly running their

own small businesses,

living very modestly, and

disproportionately
driving pickup trucks.

It turns out that
this is also

very true of
international business,

and a whole new
generation of

millionaires next
door are being

created by small businesses

that're increasingly
going global.

The fact is, in the
United States currently,

over 90 percent of

successful exporters are

single location
small businesses,

37 percent of which have

fewer than 20 employees.

Think about that
for a moment.

Over a third of

successful
exporters are about

the same size as

your favorite local
clothing boutique.

In fact, some of
them actually

are your favorite local
clothing boutiques.

The cliche would be
to call them mom and

pop businesses, and
many of them are.

But many more would
actually be better

described as
mother-daughter businesses.

A growing percentage
of them are

female-owned and operated.

What do small
businesses export?

Well, really anything
and everything.

Here's some examples of

small business shipments

in just the last week.

Custom made tops for
off-road vehicles,

material for making
dental molds,

multi-level luxury
kitty houses,

slobber proof
webcam, so you

can skype with the
dog while you travel.

Tailored orthopedic
products,

woodworking equipment,
skateboards,

stand up paddleboards, and

my personal
favorite, steampunk

costume jewelry.

This one might require

a little bit of
explanation.

These aren't very
tiny steam engines.

Steampunk is a huge trend

among fans of science

fiction and fantasy that

re-envisions the genre with

1800s era, Industrial
Revolution inspiration.

Think George Lucas
meets Jules Verne,

Princess Leia
in a hoop skirt

with a parasol and

the millennium falcons
now at dirigible

with ornate gears
and tail fins.

This export is my favorite

because they're
very illustrative

of how many
businesses first get

involved in
international trade.

This is one of

those mother-daughter
companies

that we're talking
about a minute ago.

In a couple of years back,

they weren't planning
to export at all.

In fact, they
went to import.

Their plan was to import

really cool retro

Victorian and
gothic jewelry

to sell the steampunk
fans who dress

up in costumes and
go to conventions.

What they'd hoped to do was

to import these items from

the coolest Victorian and

Gothic places that
they could think of.

But they couldn't find
a supplier in London,

or Hong Kong, or Prague,

or anywhere else
they thought that

things like this
might be found.

They had their own

pieces custom manufactured,

and they put them up on

their website
hoping to sell to

the locals who
were working on

their costumes
for Dragon Con,

aka nerdy grow,
an annual event

drawing 52,000 genre fans.

But what they got, were
orders from London,

and Hong Kong,
and even Prague.

That's when they did what

many companies do when

first presented with

international growth
opportunities.

They fought those
orders off hard.

They walked away from

sales and left money
on the virtual table.

They told customers that

they were only
set up to sell

domestically and
they even put

terms to that effect
on their website.

But they also had

their phone number
on their website.

One persistent

potential international
customer,

absolutely
insistent that they

were going to
take her money,

called and patiently
walked them through,

what would be
required to ship

her order internationally.

It turned out to
be a lot less

difficult than explaining
what steampunk is.

When they got to the
part about payment,

the customer
courageously asked them,

you do have credit
cards in your country?

Now today this business has

very different terms on

their website, and
more importantly,

they've got over 280,000

in international
top-line sales,

which have grown
to account for

about a third of
their revenue.

There are thousands of
examples like this.

Small business
owners becoming

unlikely millionaires
by opening

their shops to
international trade.

But here's the crazy part.

In the United States,

fewer than one percent

of companies
currently export.

This is the lowest level of

active exporters in the
industrialized world.

The vast majority
of US business,

stops at the border.

We talk about leaving
money on the table,

Yikes, why is
this the case?

International borders
have never been

more permeable to trade
than they are today.

The fact is, the barriers

that most companies face

in going international just

aren't the borders
on the map.

The borders they
have a hard time

crossing are the ones
that they establish

for themselves, doubt,
uncertainty, fear.

Doubt that there's
international

opportunity
available for them.

Uncertainty about
how to reach

customers in
foreign markets.

Fear, fear that

international business
is inherently risky.

Now, this first
self-imposed border,

doubt that there's
international opportunity

available for
most businesses,

it simply couldn't be
further from the truth.

The International
Trade Administration

reports that over
70 percent of

the world's purchasing
power is now

located outside
the United States,

along with 95 percent

of the world's consumers.

International
opportunity isn't just

knocking at your door.

It's already eaten
your porridge,

sat in all three of

your chairs and
it's heading

upstairs to figure
out which one

of your beds it wants.

The second self-imposed

border is uncertainty.

Uncertainty about
how to reach

customers in
foreign markets.

This is what causes
most companies

to pull the virtual
welcome mat

off their websites and

confine themselves
to domestic sales.

What if we do something
wrong? They ask.

What if we sell things
we aren't supposed to,

to people or places we
aren't supposed to?

That's not actually
international business,

that's called smuggling.

That's something
completely different.

If you're border
shifts that

quickly from we don't
know how to export,

to what if we accidentally

become international
crime lords,

it probably wasn't a very

firm board to begin with.

Either way, there literally

is an app for
that and it'll

keep you out of trouble
and it's available to

your business
for the low cost

of absolutely free.

The final self-imposed
border is fear.

Many companies truly
believe that engaging in

international growth
opportunities

opens you up to

everything bad that
can possibly happen.

Loss, damage, theft,
delay, diversion,

regulatory penalty,
the high seas piracy,

some of them have seen

the movie Captain Phillips,

maybe one too many times.

Numerous studies
have shown that it's

actually far more risky to

remain confined to

the domestic market than it

is to engage in

international growth
opportunities.

Companies that export
have exponentially

more growth
opportunity available

to them and those
that don't,

and they are
nearly eight and

a half percent less

likely to go out of
business than those are

confined to the
domestic market.

Knowing those numbers,

why wouldn't you export?

That one percent of
American companies

that do currently export,

they have phenomenal
growth opportunities.

Those are the businesses
that are creating

the next generation

of millionaires next door,

and even some billionaires.

A moment ago we talked

about the Gap when we were

talking about visualizing

successful business.

Do you know how
they got started?

A husband and a wife having

a very hard time finding
pants that fit him,

opened a single small store

to sell blue jeans
and vinyl records.

Today they shipped to over

90 countries around
the world and they

open up more stores
internationally

every year than they
do domestic ones.

For today's
neighborhood business,

the neighborhood is now
a whole lot bigger.

The world is your neighbor,

and it's waving,
and it's smiling,

and it's trying to
get your attention

because it wants to
do business with you,

and it's time to wave
back. Thank you.