This case study was published in the International Economic Development Council’s (IEDC) “Economic Development Credit Analysis and Finance” manual.
The economic importance of exports for states and localities has risen significantly in recent years. According to Virginia’s 2015 International Trade Profile, exports drove 27% of American economic growth in 2014 and reached an unprecedented $2.35 trillion that year. Approximately 95% of the world’s consumers live outside of the US, and the rest of the world is expected to drive over 80% of global GDP growth by 2020, meaning exports will become even more critical in the coming years. These trends and expectations are reflected in Virginia’s own export growth, with total state exports increasing by 56% between 2003 and 2014, reaching $35.9 billion by 2014. Additionally, exports contributed to about 30% of Virginia’s growth between 2009 and 2014[i].
Recognizing this vital opportunity to participate in global growth, the Virginia Economic Development Partnership’s (VEDP) International Trade division has dedicated several programs to developing the state’s competitiveness and strategic growth in foreign markets. One such initiative, the Virginia Leaders in Export Trade (VALET) Program, works to encourage local businesses to create dynamic export models. Challenges like startup costs, expertise gaps, research capabilities, and strategic modeling are difficult for any business to successfully navigate on their own. Through access to professional advice and capital investments, VALET reduces these barriers and guides companies toward successful export models. Each year, twenty-five companies engage in a two-year business acceleration program, learning to develop international sales plans, strategize business expansion, and gain entry into new markets. VALET provides its participants, generally middle market firms, with the expertise and capital necessary to get these initiatives started and overcome barriers to international trade.
Eligible companies must be at least three years old, employ twenty employees, and earn $2 million in annual sales. These criteria are necessary to ensure a firm has the domestic footing and stability to fully commit to an export plan. VALET carefully selects firms to ensure their ability and willingness to commit the necessary time and resources to developing successful international operations.
VALET provides several key services:
Up to $30,000 for export-related expenses
The state-funded program will reimburse expenses related to developing and implementing export strategies, up to a maximum $30,000 per participant over two years. Commonly reimbursed activities include market research and site visits. These reimbursements are designed to offset the initial costs of developing and launching an export model that may otherwise deter businesses from engaging in these activities.
Access to professional services from VALET Partners
VALET’s partners are industry experts in areas such as accounting, corporate strategy, marketing, and legal services. These twenty-four leaders help fill the skills gaps in international business planning, providing necessary resources to participating companies. In addition to advice and guidance, participants have the opportunity to access partners’ services at a discounted rate. For example, an American defense contractor who mainly deals with the US Federal government may want to expand its operations to Germany. This company will need to redesign its website and marketing to cater to a new audience, who is unfamiliar with American jargon or technical language. VALET partners with expertise in German translation, IT, and marketing can be utilized by this company to successfully expand into the German market.
Meeting with participants throughout the two-year program, VALET program managers guide them through the export process, addressing financial, communications, and legal hurdles faced in international markets. These program managers help companies identify markets with viable opportunities, and encourage participants to focus on no more than two to three countries. Additionally, managers help participants identify which services they will need access to and which partners may be of assistance. Participating companies work with VALET to develop a comprehensive business strategy, and receive support throughout implementation.
Networking and educational events
Once enrolled, companies attend an introductory orientation event where they learn about the program and its partners. Through facilitated networking, participants can meet each partner and identify which companies fit with their goals and expertise needs. Other events throughout the year, featuring panel discussions and networking opportunities, help participants stay connected. VALET also offers educational services through webinars.
Each of these services aims to enhance participating companies’ export capabilities. To understand their program’s impact, VALET tracks key baseline metrics such as international sales levels, international sales as a percentage of overall sales, and number of employees. These metrics are tracked class by class after graduation from the program. On average, companies achieve a 54% increase in sales after participating in the VALET program. Enhancing the export strength of Virginian companies translates to increased economic growth within the state, and makes its businesses more attractive for foreign direct investment.
Overall, the VALET program helps Virginian companies grow. VEDP recognizes the important potential for international success to impact local economic development, and strategically develops opportunities for local companies to take part.
For more information, visit, https://exportvirginia.org/valet-program/.