Montana has more than doubled grant funding available in the Small Business Administration’s State Trade Expansion Program (STEP) in the past 10 years to help the state’s small business exporters.
The state first requested $300,002 from the SBA in 2011. This year Montana received $754,000 in federal funds, and with the required matching funds, more than $1 million is available.
The STEP grant can help Montana exporters conduct international marketing activities with reimbursement of 75% of international marketing costs, or up to $10,000.
“It’s for small businesses to help them either begin exporting, get into new export markets or expand their sales in the markets they’re already in,” Angelyn DeYoung, international trade manager for the Montana Department of Commerce, told The Center Square.
The current return on investment over the next year is estimated to be about $51 million, with 145 jobs created or retained, DeYoung said.
Exporting may enable a business to level out its sales cycle. If a company sells a winter product like skiing gear, exporting to the southern hemisphere flattens out the sales cycle instead of sales being high solely during Montana’s winter, she said.
“Plus, exporters are more likely to withstand any domestic sales slumps. So if the U.S. is experiencing financial issues, other markets that they sell to might not be experiencing those same sales slumps and our companies can withstand that,” DeYoung said.
If Montana can get companies to sell outside the country, that brings new money into the nation and state that didn’t exist before, she said.
The state Department of Commerce helped more than 300 companies with exporting last year, whether it was technical assistance or distributing grant funds. Companies may use the funds for international marketing activities.
“We’re sharing the risk with them knowing that these grant funds that they get, they’re going to reinvest into the business and either continue on with that project, hire somebody new, and/or try or take that lesson and head into a new market,” DeYoung said.
Some companies use the funds to exhibit at an international trade show. They may have website analytics or market research that makes them believe a market like Brazil is good for them. The state offers them a few options, including working with a U.S. Commercial Service, part of the U.S. Department of Commerce’s International Trade Administration, which has trade offices in embassies around the world.
If a company was interested in growing its market into Brazil, the state would set up a Zoom call with a U.S. Commercial Service representative and the company to find out about their products, how they are used and about their typical buyers. With that information the trade official would go into the market, do some research, and talk to potential buyers.
“Then they would come back to the company and they would give them an assessment of whether or not that’s a good market for them. Sometimes that assessment is ‘No this is not a good market for you. The competition is saturated, your price point is too high. Brazil has 100% tariffs on USA products, so you know it’s just not a good fit for you,’” she said.
That could save a company $10,000 to $20,000 spent trying to break into that market, freeing that money to be spent elsewhere.
“Or they might go to a trade show and we reimburse them for trying out that trade show for the first time,” DeYoung said.
The trade show might turn out to have the wrong audience or wrong market, but the reimbursement funds cover the costs. It can be a positive help for a negative experience, which is why she said the state Department of Commerce considers it risk sharing for them.
They also can use the STEP grant funds to develop international websites, creating websites tailored to each country’s markets with search engine customization geared toward those potential customers. International digital marketing is another possibility, with the company buying ads to get their product in front of the international buyer, she said.
The STEP grant funds can help remove barriers to selling in a market. An example is the need for the CE mark, which affirms its conformity with European health, safety, and environmental protection standards, to sell products in the European Union.
“That’s going to cost them $20,000 to get that certification so that they can begin to sell their equipment into the EU,” she said.
The state program can reimburse part of the expense of overcoming that obstacle of getting into that market.
The state sees the program as taking individual businesses and making them more successful, which paves the way for other exporters to get into that market and expand.
This article was originally posted on Montana ‘sharing the risk’ by helping small business exporters, state trade official says