create / 2019

Catapulting LA's Small Businesses Into Global Markets

Idea submitted in the My LA2050 Grants Challenge by Community Vitalization Council

The International Business Accelerator has worked with more than 30 companies (60% women founders and nearly 50% minority owned). We have found that a major obstacle for companies to export are requirements for large (container load) shipments and the IBA has developed a strategy and series of incentives to address this problem. In conjunction with LMU, we will work with 20 LA county companies in two cohorts with the goal to create $1 million in new revenue, 20 direct jobs and 60 indirect jobs.


What does your organization do?

The Community Vitalization Council promotes community level economic vitality and jobs. The International Business Accelerator, a program of Civic 180, supports SMEs to expand into global markets

Please list the organizations collaborating on this proposal.

  • Loyola Marymount University College of Business Administration - confirmed

Briefly tell us a story that demonstrates how your organization turns inspiration into impact.

Over the years we’ve witnessed a recurring and frustrating speedbump for small manufactures. The founder diligently prepares a global export strategy, solidifies the supply chain, prepares for regulatory compliance, creates foreign interest, runs the numbers and…BAM…that first order comes in.

Using a real-life example from our accelerator, Mary M had local momentum and ready to take on the world, literally and figuratively. Her breakfast and healthy snack products were selling locally, boasted great packaging and branding and our curriculum had her prepared.

Until she received an initial purchase order from China for multiple 40’ x 8’ container loads. As a small manufacturer, she couldn’t afford staff and materials to manufacture such an order. She remained focused on the local market and eventually closed the business to take a job to provide insurance for her family.

The program we’ve created eliminates this situation for small business owners like Mary M. .

By focusing on smaller international B2C shipments, small manufacturers like Mary M benefit in three way. First, they keep manufacturing costs stable. Second, they minimize duties and tariffs through special federal programs. Third, they maximize profit margin by selling at full retail pricing.

We unshackle the small business owner/manufacturer from burdensome capital requirements by focusing on global B2C.

Add this to the IBA’s export accelerator curriculum and network of experts like KPMG for cross-border tax and accounting guidance, global IP attorneys, funding experts and more.

Our My LA2050 backed program mitigates and removes the burden of a startup selling overseas by enabling maximum profit via small shipments and the know-how to export efficiently, compliantly and profitably.

Most importantly, this program ensures owners like Mary M will never be haunted by the what-ifs of unrealized growth and profits.

Which of the create metrics will your submission impact?​

  • Manufacturing activity
  • Minority- and women-owned firms
  • Number of high-growth startups

In which areas of Los Angeles will you be directly working?

  • Central LA
  • East LA
  • San Gabriel Valley
  • San Fernando Valley
  • South LA
  • Westside
  • South Bay
  • Antelope Valley
  • County of Los Angeles

How will your project make LA the best place to create?

PROGRAM EXECUTION

The “Going Global through Small Shipments” program draws on the methodology and curriculum of the existing IBA Export Accelerator. The twelve week program has six workshops led by IBA staff and industry experts. The topics include:

  • Creating a global company and resources for exporters,

  • Cross-cultural awareness and negotiating strategies,

  • Product readiness (standards, identifying barriers to entry, landed-cost value),

  • Tax, accounting, finance and funding strategies,

  • Legal issues (contracts, intellectual property, HR),

  • Market entry strategy,

After each workshop, a business coach will work with each company to translate the content into business practices. At the same time, an intern will work with each company to develop a research report tailored for the company’s product for a specific country. With the business coach, each company will develop an export strategy for initial sales and future market development.

As the program progresses, the company will be connected to specific resources and incentives, including logistics providers, de minimis export software tracking, market research resources, agents or distributors in other countries, website design and global marketing analysis. The companies will also be connected to federal programs (US Commercial Service, SBA export finance and EXIM Bank insurance) and California export grant programs (STEP).

At the end of the program, the companies will present their companies at a Demo Day to an audience of potential customers, industry experts and angel/vc investors.

The IBA will look to LA 2050 to get the word to LA SMEs that exporting helps the community.

POPULATION SERVED

This program is aimed at LA County small business owners that currently are making a product suitable for export. Of the 350,000 SMEs in LA County region, only 12% currently export. Why don’t more become involved in global trade? SMEs most frequently cite concerns about risk and paperwork. Those concerns are even greater for women and minority owned businesses. The IBA directly addresses those concerns through its training and coaching process.

From its very first cohort, the IBA has made a special effort to reach out to women and minority owned businesses. 60% of the companies the IBA has worked with have women founders and nearly 50% are minority-owned. In recruiting for the two cohorts, we will aim for similar broad diversity to include women, minority and immigrant owned businesses.

TIMELINE

July-Aug: Recruit and select First Cohort of 10, hire interns,

Sep-Nov: First Cohort twelve-week Export Accelerator Program and Demo Day

Dec: Evaluation of First Cohort

Dec-Jan: Recruit Second Cohort

Feb-April: Second Cohort Export Accelerator Program & Demo Day

May: Evaluation of overall program

Metrics: $1M + 80 jobs

New global sales – average of $50,000 per company X 20 companies or $1 million total

New direct jobs – 20

New indirect jobs – 60

Students trained – 8

In what stage of innovation is this project?

Post-pilot (testing an expansion of concept after initially successful pilot)

Please explain how you will define and measure success for your project.

For three chosen metrics (manufacturing, women/minority owned businesses and high-growth startups):

– Train 20 companies in the 12 week program (six workshops, follow-up coaching, integrating incentives) We continue to work with the companies after the 12 week program.

– Companies will on average start/increase revenues from global sales by $50,000. The goal for the project is to generate at least $1million in global sales from LA County companies.

– The 20 companies will on average create one additional direct job. That will create 20 FTEs during the first year.

– Based on current ratios for non-durable manufacturing jobs in LA County, we estimate that the 20 direct jobs will generate an additional 60 indirect jobs.

For the Learn category – College completions

8 interns trained in international business entrepreneurship. This will giver the students first-hand experience in specifics of doing international business that are not covered in international business programs.

LMU & the IBA are dedicated to meet the following LA2050 goals of:

– Making LA County the nation’s leader in minority, women, and veteran-owned businesses. IBA graduates are currently 50% women and minority-owned businesses.

– Manufacturing firms in LA County will account for six percent of all establishments countywide, employing 18 percent of the workforce. We do this by not only boosting exports and sales, but fortifying the business for rapid growth.

– Los Angeles will nearly double the share of high-growth startups to five percent of the top 5,000 firms nationwide. The IBA and LMU are committed to leveraging the LA205 grant into a perpetual acceleration program for create and accelerator our region’s small manufacturers.

LMU and the IBA will remain vigilant of meeting other LA2050 Goals such as recruiting and retention rates for higher educational institutions, keeping college graduates in LA County for five years, help founders secure patents and venture capital, increase jobs per capita, including programs helping the formerly incarcerated. The LA205 Grant will enable us to attract federal funding for our mission as we have done, using a recent example, for a 2018 backathon done in conjunction with the USC Marshall School of Business.