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November 1st: Torsten Jacobi, CEO of Creative Weblogging, joins host Anita Campbell. Sponsored by Six Disciplines. Show details.
Saturday, July 02, 2005
Issues Small Businesses Face in International Trade
As more small businesses start to do business globally, what are the issues they face?

Dr. Jeffrey Cornwall of The Entrepreneurial Mind offers some interesting, real-life insights about the challenges small businesses today face when doing business globally. He summarizes points made by Ian Levitt, owner of an automotive parts distribution business called Qualcast, during the recent International Small Business Council convention chaired by Dr. Cornwall:
  • Credit risk. As he began to do business in China, he faced the need to finance large purchases by Chinese customers. He would have to carry their debt until the parts arrived and were weighed and checked. This could mean several weeks to months. Unfortunately, banks view lines of credit on such accounts receivable as too risky to finance even if only for a few weeks. He was able to speed the process along, but had to tie up all of his cash on a single order.


  • Currency issues. More of his European customers now do business in Euros rather than dollars. This opened him up to significant currency exchange risks. Even as a small business person, he was able to buy a large stake in Euros for twelve months to stabilize his exchange rate.


  • Credit card fraud. Sadly, credit card fraud is a major issue for international trade, and many clients insist on using credit cards for purchases. Ian said that he can no longer accept credit card orders from his international clients due to the high rate of fraud.

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