East European Entrepreneurs Think Globally

In my column this week at the Tennessean I offer some final reflections on our trip to Eastern Europe:

I have been in Eastern Europe with a group of students from Belmont University for the past three weeks.

Although the entrepreneurial climate in this part of the world is much weaker than in the United States, the entrepreneurs we have met have tended to have a global view for their small businesses.

For example, while shopping in a small antiques store in Prague, Czech Republic, we found items that originated from all over Europe.

One item caught the interest of one of my colleagues. But when he inquired about its price, the store owner told him that it had been sold over the Internet to a buyer from overseas.

During our travels, we took our students on a tour of the Ruckl crystal factory, which is a small business in a rural part of the Czech Republic that had been taken private after the fall of communism.

Their craftsmen make fine, handmade leaded crystal using age-old techniques. Although they compete with mass-produced products from China and Poland, Ruckl has been able to compete effectively in the global market. They sell 80 percent of their products outside of their country in outlets throughout the world.

Minimize risks

American small businesses are not keeping up with the global strategies of entrepreneurs from other countries. A 2007 survey sponsored by UPS found that most of America's small businesses have failed to explore the opportunities offered by an increasingly global economy.

Specifically, 67 percent of the U.S. small enterprises are still relying solely on the U.S. economy. This is due to their perception that international trade is too risky, an admitted lack of knowledge about international markets, and their unfamiliarity with regulations related to expanding a business beyond U.S. borders.

While the risks associated with international trade are real, they can be overcome.

The financial risks of engaging in foreign transactions have resulted in many entrepreneurs not getting the products they had paid for or not getting paid at all. Banks generally offer several ways to reduce the financial risks of trade, but the payment procedure ultimately depends on finding partners whom you can trust.

While banks can help -- often for a sizable fee -- there is still some relative degree of risk taken by both sides of the transaction. There is almost always a trade-off in these things. And when thinking about the savings from outsourcing, make sure to be clear on all expenses, including shipping, the cost of transactions gone bad, and bank fees for international transactions.

Entrepreneurs who plan to sell or buy in the global marketplace need to have access to an attorney who knows international trade law. Make sure to get a clear understanding of the cost of regulatory compliance and figure that into your expenses.

The recession is forcing entrepreneurs to think about new sources of materials to keep costs down and new markets to sell products. The global marketplace offers many opportunities for today's entrepreneurs -- just take care to learn the ins and outs.