By Kym Reinstadler | MAIN STREET STRATEGIES
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WEST MICHIGAN — Of the 800,000 small businesses in Michigan, less than 2 percent take advantage of a potential growth market: Exports.

Sure, not all small businesses manufacture products that can be exported. Nevertheless, with two-thirds of the world’s purchasing power in foreign countries, it’s clear that companies aiming to increase sales and profits are wise to cast their nets beyond the U.S. borders.

And help is on the way. Almost $1.5 million in federal funds were announced Oct. 1 to help Michigan small businesses develop foreign markets.

The funds are through the State Trade and Export Promotion (STEP) program, part of National Export Initiative to double U.S. exports by 2015. President Barack Obama announced the NEI during his 2010 State of the Union address.

The Michigan Economic Development Corporation’s proposal for distributing the funds garnered the fourth largest award nationwide. The MEDC is finalizing an application process for the funds, which will be administered by regional service providers in Grand Rapids, Lansing, Traverse City and Troy.

“We are strategically creating a Michigan-wide pipeline to get companies through the process quicker so Michigan doubles our exports in five years,” said Carol Lopucki, state director of the Michigan Small Business & Technology Development Center, part of the Business Outreach Program within the Seidman College of Business at Grand Valley State University.

The Van Andel Global Trade Center, another facet of GVSU’s Business Outreach Program, will be administering services in greater Grand Rapids together with economic development organizations such as The Right Place Inc., Lakeshore Advantage and Muskegon Area First.

VAGTC will provide market research, customized export counseling and training on export regulation compliance, as well as background checks on foreign buyers. The center offers programming on cultural differences and research on agents and distributors. VAGTC also organizes foreign trade missions and conducts foreign and domestic trade shows.

Never before has there been such a multi-faceted marshaling of public and private resources to increase the number of small business exporters and the value and volume of exports from the state of Michigan, Lopucki said.

Participants in the Grand Rapids center have set a high goal of providing some level of export or export-preparedness service to 600 businesses in the first year, Lopucki said.

“Diversifying your customer base is a really good strategy,” said John O’Gara, regional manager of the Small Business Administration. “That way a company is not so beholden on one or two large buyers that can make you or break you.”

Michigan’s fortunes have long been married to the automotive industry. When car companies thrived, they buoyed businesses throughout the state. The recent recession provides a sterling example of why it is wise to reduce dependence on local markets, O’Gara said.

Michigan ranks eighth in exports nationwide because of the activities of large businesses like General Motors, Ford and Dow.

A 2011 Brookings Institution report found makers of manufactured goods in the Grand Rapids metro area exported nearly 15 percent of their output in 2009, mainly to other parts of North America.

The STEP money will help develop an export mindset, especially among small companies with fewer than 500 employees that already embrace exporting as part of their business model or strategic plan, O’Gara said.

The funds can be used to offset small business participation in foreign trade missions, international market research, website translation fees, the design of international sales campaigns, U.S. Department of Commerce subscription fees and SBA-approved initiatives.

Michigan’s plan focuses on getting more small business owners on airplanes bound for trade shows and trade missions in China, Spain and Germany, where they meet face- to-face with qualified buyers.

The MEDC plan features a three-tiered approach to promoting exporting among small businesses that have never considered it, businesses that have exported products but did not seek out those markets themselves, and businesses determined to mine export markets.

“This is going to provide the connection that helps good deals get done,” said Gerald Moore, director of SBA’s Michigan District. “A good deal has to have exposure. This program is going to increase the exposure of Michigan small businesses.”

Moore has started a couple of businesses in his career, and he knows exports can play an important role in growing a business during tough times.

His only disappointment is that the STEP announcement didn’t come in August, when he began a 15-stop tour around the state to promote SBA services and resources for small businesses.

Word of the grant arrived just before the tour’s final meeting, held Sept. 30 in Detroit. The 200-plus small business owners who attended that meeting at the Federal Reserve seemed very encouraged by the news, Moore said.

It shouldn’t be a giant leap for Michigan manufacturers to explore markets in neighboring Canada, which has similar customs and culture.

Moore tells a story about Sweet Potato Sensations, a Detroit bakery that ships pies, cakes, cookies, cheesecakes and casseroles to customers in Southeast Michigan.

“I don’t think they’d considered selling in Windsor, although it’s closer than a lot of cities they were shipping to,” Moore said. “We can open up trade by changing our mindset.”

Various governmental and public-private partnerships stand ready for counseling, training and financing support that will help small businesses succeed in global markets.

New technologies make it easier than ever to access the current information about foreign markets, information necessary to decide whether “going global” is a good idea.

Generally, if a product has been accepted by the U.S. market, it is a good candidate for export, even if modifications are required, O’Gara said.

U.S.-made products often have a competitive edge in foreign markets, but O’Gara is careful not to paint a gold rush scenario.

He says it takes time and money to develop a profitable export business, but plenty of help is available to small business owners who take this path.

Frank Ferro, MEDC international trade manager, said he expects Michigan small businesses will begin applying for grant funds as soon as the application becomes available.

In West Michigan, the STEP grant will be serviced through the Van Andel Global Trade Center. VAGTC specialists provide consulting and training services, resource development, cultural education, a language center, advocacy and speaker services at affordable rates.

VAGTC Executive Director Sonja Johnson could not be reached as of press time because she was in Germany scouting business connections for West Michigan companies. MSS