Jack Tomasello, Tomasello Winery vice president and co-owner, says he's capitalizing on exports because of his proximity to Port of Elizabeth. |
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In bid to grow, small companies look to exports
Tomasello Winery, in Hammonton, got involved in international trade almost by chance, but like other New Jersey small businesses that have gotten involved in exports, the winery has developed a healthy revenue stream.
Jack Tomasello, winery vice president and co-owner, said Japanese customers interested in New Jersey blueberries asked the winery about its blueberry wine in 1998. That led the 78-year-old winery to export for the first time. |
"It's come a long way, and it's probably going to get better," he said. The state and federal governments foresee exports increasing sharply over the next several years, and New Jersey small businesses are positioning themselves to take advantage of a range of government-sponsored programs aiming to boost trade.
And while exports may call to mind multinational conglomerates, nearly half of all New Jersey exports are by small or midsized businesses, according to the federal government. Trade experts caution that small businesses should first gain an understanding of potential markets and research the legal and financial aspects of exporting, as well as what distributors are available in potential markets. However, a wide range of companies have found success in developing exports, reflecting the diversity of the state's economy.
For example, Smartplay International exports custom lottery equipment to 175 different lotteries around the world. Its products include ball-drawing machines and gaming wheels. Overseas sales were just over half of total sales when the 22-employee company, based in Edgewater Park, started 18 years ago. Now, such sales make up 75 percent of Smartplay's business.
"Just about every country in the world has a lottery, even the poorest," said Smartplay President David Michaud.
Michaud said international sales have become even more important as the U.S. economy has struggled. "We do a lot all throughout Southeast Asia and in Europe — England and Ireland, in particular," he said. Michaud said New Jersey products can meet the needs of growing international markets, adding that business owners could benefit from exploring their options. "There's quite a need out there. The competition is really good, so you really need to sharpen your pencils, but I'd encourage anyone to go outside," Michaud said. "It's a much bigger market area."
Now is a good time for businesses interested in international trade to start, according to Roger S. Cohen, lead international trade consultant for the New Jersey Small Business Development Centers and president of his own consulting firm, Cohen International.
"As long as the domestic business is slow and you're looking for ways to increase market size, share and partners, you might as well do it now," so that when the economy picks up, businesses will be able to take advantage, he said.
Cohen said it makes sense to start small, in a "gentle" market, where a business owner can navigate issues ranging from currencies, language differences, finding local distributors and researching markets.
"You can't just say, 'I want to sell all of my stuff somewhere,'" Cohen said. "We need to match a product with a market, then we need to develop a market strategy." While small businesses may have difficulty finding the time and expertise needed for international trade, in comparison with larger firms, they have more agility, and their owners can get more first-hand knowledge, Cohen said.
"A small-business owner can act quickly and make decisions quickly," Cohen said. "The owner can meet important people in overseas markets and have a personal impact — and provide personal direction."
These businesses also may be in a position to receive government assistance. The state's trade programs were recently transferred to the Business Action Center, the state's business office overseen by Lt. Gov. Kim Guadagno. Linda Kellner, acting executive director of the center, said in 2009, 92.7 percent of all New Jersey exporters were small and midsized businesses, accounting for 43 percent of export sales.
These businesses' share of trade is growing, comprising 5 percent more in 2009 than five years earlier, according to federal statistics. The export revenue for these businesses averages $780,000.
"They are, and will be, a key component of growing New Jersey's economy," Kellner said. The BAC has been working with federal authorities, including the U.S. Commercial Service and the Export-Import Bank of the United States, to identify potential markets, as well as sources of financing, for New Jersey exporters.
Kellner said both New Jersey companies interested in exports and international companies interested in foreign direct investment in New Jersey have been contacting the BAC call center.
"Our business advocates will put together an analysis of the industry and key growing markets" for companies interested in exports, Kellner said. This effort will extend to matching companies with target markets, and helping with business-to-business contacts.
Government help can be needed when companies meet regulatory or other roadblocks. "Advocacy usually is needed when a company feels as though it is being treated unfairly," Kellner said.
The Export-Import Bank plays a key role in financing exporters. In January 2010, the federal government set a goal of adding 5,000 new business exporters, and doubling the volume of small business exports to $9 billion, by 2014.
Increased financing from the federal agency "is critically important for us at the Business Action Center as we try to help New Jersey exporters," Kellner said. "It gives us a very real tool."
Tomasello Winery has worked with state officials to start exports to Taiwan through a distributor and grocery store chain. The business is looking to build on two years of steady exports to China, which has surpassed Japan as its key export market. It sells cabernets, red table wines and blueberry wines in China.
"I probably sold more in China in two years than I sold in Japan in 10," Tomasello said. Tomasello has capitalized on one of the state's strengths for export — its proximity to ports. The winery has periodically driven containers full of wine to the Port of Elizabeth. While exports comprise less than 10 percent of the winery's sales, Tomasello said the 40-employee business has been successful, especially considering the intense international competition. It's important for New Jersey small businesses to understand the different markets.
"We're in the wine business, and every country in the world makes wine," Tomasello said. While France and other European wine-producing countries weren't realistic targets, Asian countries have worked out well. As a small business, Tomasello also has benefited from the niche it staked out in New Jersey.
"We do a lot of fruit wines. We do a lot of niche items," Tomasello said. "If you're in the wine business in the state of New Jersey, you better find niches — or otherwise, you're going to get lost."
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