For many Canadian small and medium-sized enterprises (SMEs) that want to start exporting, the United States is the obvious first market choice. With a population of more than 300 million and our shared common language and similar culture, the massive market south of the border holds much appeal and is within easy reach for most Canadian businesses. 

However, the sheer size of this opportunity can be overwhelming for Canadian SMEs that don’t know where to begin when it comes to formulating an export plan. Based on my experience in helping SMEs get started in the U.S., I would recommend focusing on the following three areas:

1. Identify a region

A common mistake many SMEs make is thinking about the U.S. as one large homogeneous market. At EDC, we recommend thinking about the U.S. as a series of regional markets, each with its own distinct set of sectors, opportunities and customers. Research the region that makes the most sense for your company to enter first, based on sector or industry and the customers you would like to reach. 

One of the most cost-effective ways to research regions, states and cities is to participate in industry-specific trade shows with a regional or state focus. The most high-value trade shows are those sponsored by provincial or federal partner organizations, like EDC, that offer business-to-business matchmaking opportunities, giving you built-in access to a group of buyers in the region. 

A good example is the recent EDC-sponsored Taste of Canada trade show that took place in Chicago in October. The show connected Canadian food suppliers with U.S. retailers in the Illinois region looking for new niche products to market.

2. Determine your market-entry strategy

Think of exporting as a journey, rather than an end point. Once you’ve determined the region or state you want to enter and identified the customers you want to reach, your market-entry strategy will be determined by the size and nature of the opportunity.

You may have only one or just a few U.S. customers at the beginning of your journey. In that case, your market-entry strategy will likely be direct exporting from Canada, shipping directly to your customers. As your journey continues and U.S. business grows, you may reach a point where it makes sense to have on-the-ground representation, through a reliable agent or distributor who can help you reach more customers. As your U.S. customers grow and demand more, you may need to localize your supply in the U.S. and set up a manufacturing facility there.

As you move along this journey, there are several partners in Canada and the U.S. who can connect you with the people and resources you need to seize your opportunity, depending on where you are in your export journey.

  • First and foremost, the Canadian Trade Commissioner Service (TCS) has more than 100 trade commissioners across 20 consulates covering every region of the U.S. waiting for your call. Trade commissioners can help with everything from alerting you to trade show opportunities in your sector and region, to finding reliable agents and distributors and matchmaking opportunities. 
  • The American Chamber of Commerce in Canada (AmCham), which has seven chapters located across Canada, is dedicated to the expansion of cross-border trade and investment opportunities and helping Canadian companies enter or further develop their activities in the U.S. market. 
  • SelectUSA is a mission associated with the U.S. Department of Commerce that serves as an aggregator of all the state and municipal level economic development organizations throughout the U.S. For Canadian exporters at the localization of their journey’s supply stage, this is a good resource to help guide you through those steps, including navigating the regulatory environment in your target region.

Another thing to consider in your U.S. market-entry strategy is to think about your next exporting opportunity beyond the current one. For example, an Ontario-based company that wants to reach more customers in the western region of the U.S. may consider setting up distribution or manufacturing facilities in a place, like the state of Washington. That facility may in turn be an ideal launching pad to begin exporting to Asia.

3. Secure the working capital you’ll need

As you move along your export journey, the amount of working capital your company will require will surely increase. You’ll need to work closely with financial institutions to ensure you have that working capital available. EDC can play a major role in helping you meet your needs through a variety of different solutions.

For example, as you secure export contracts, you may find that your Canadian bank doesn’t put the same value on your foreign receivables as it does on your domestic receivables. By insuring your foreign receivables with EDC’s receivables insurance, your bank may be more inclined to extend your line of credit and provide you with the capital you need to fulfil the contracts. 

It’s also important to work with financial partners that can help complement your U.S. exporting strategy. Most of the big Canadian banks now have a substantial footprint in the U.S. Especially if you’re at the stage of localizing your presence in the U.S. through a manufacturing facility, it makes sense to work with a Canadian bank that can help in the region you’re targeting. Conversely, many big U.S. banks also have a presence in Canada and are looking to help Canadian companies that want to grow south of the border. 

With these three tips in mind, you can start formulating your U.S. export plan today by accessing EDC’s guide to Doing Business In The United States.