David and Linda Shogren are the duo behind U.S. International Foods LLC, a Missouri-based small business that specializes in exporting high quality food and grocery products abroad. Focusing primarily on Asia, they match American-made goods with local cultural preferences.
The rise of middle class markets in these developing countries has sparked an increased demand for quality Made-In-America products. Mr. Shogren’s two decades of food marketing and sales experience positioned him well to start a business to fulfill these demands.
Since 2011, the Shogrens have taken advantage of some key local resources, including the University of Missouri Small Business Development Center’s Office of International Trade, which helped them to draft their first international business plan.
In addition, the company has secured both an Export Express loan and an Export Working Capital loan, both guaranteed by the U.S. Small Business Administration, to offer open account terms on a wider basis and facilitate working capital to support increased sales.
The sustained access to capital has allowed U.S. International Foods to continue along a strong growth trajectory over the years, leading to an increase in both sales and employees. Recently, the SBA’s Office of International Trade had an opportunity to speak with the Shogrens to dive deeper into their rapid expansion into the global marketplace.
SBA: Tell us about your company.
David & Linda Shogren: Our mission is to export food and grocery products made here in the United States to customers overseas – primarily Asia. Our products include a variety of things like cereals, dried fruit, nuts, soups, snacks, confectionary products, and more. Our customers are supermarkets, and distributors that supply supermarkets, as well as some e-commerce. China was the original focus and our first market; now, we are expanding into contiguous markets from there including Hong Kong, Taiwan, the Philippines, and Korea.
What inspired you to begin your own company?
D: In short: I love food and I love to travel! I was working for a domestic food broker at the time that represented manufacturers here in the U.S. Around 2011, a new supervisor came aboard who wanted to begin to focus on selling internationally. I became the international project manager and started developing a plan to go global. US International Foods started off as a subsidiary of that company in 2011, and we were able to buy and operate it on our own in 2014.
How did you first hear about the resources you eventually utilized - like the Small Business Development Center and the U.S. Small Business Administration?
D: First, we went to the World Trade Center in St. Louis to hear their suggestions. Starting a conversation there got us into the flow of international support organizations around town. Within the first year or so, we took the State Trade Expansion Program (STEP) training, where we were introduced to a local Small Business Development Center counselor who helped us to write our first export business plan. From there, we were introduced to the SBA as well.
How did you utilize the State Trade Expansion Program (STEP) to expand your company?
D: After connecting with the World Trade Center, we signed up for their weekly newsletter which is where we first learned about the STEP program. We jumped on the opportunity to apply for funding. We’ve used the STEP grant every year since then to get funding to attend trade shows and trade missions abroad. We leverage these funds so we can travel more, particularly to shows in China like the SIAL Show. We also utilized the STEP program to test the feasibility of expanding our operations to the Middle East. In February of 2017, we traveled to Dubai to attend a different food show.
How have your company’s annual revenues or number of employees changed since securing SBA financing?
D: It has helped us grow a lot. We have grown in both revenue and employees. In 2013, our total sales were about $800 thousand. This year, in 2017, we are on track to hit $3 million in sales. A lot of our sales are through large customers on long payment terms. We would not have the cash flow to make those big sales without the SBA. In fact, three of the retailers we sell to in Asia are in the top 15 global retailers. The bigger the retailer the longer the payment terms are, so we need that financing to do business with them. With the SBA Export Working Capital Loan, we have been able to sell on open account terms: the guarantee let us get the loan and the loan lets us sell to those customers.
L: Adding to David’s point, selling to bigger retailers because we used SBA’s financing gives us a lot of credibility in the market. In turn, that makes it easier to other large customers.
L: We started with just two and currently, we have 5 employees. However, we indirectly support a lot more employees than that given our focus on Made-in-America goods. I don’t think we’d have employees right now if we hadn’t gotten the financing through the SBA.
What advice do you have for other companies that are considering selling abroad?
D: Step number one, go to the SBA. The other more general idea is when I travel overseas; I meet a lot of people from different countries. I focus on what we have in common with these people. The issues that exist in the grocery industry abroad are the same for me here, regardless of the country. I think of commonalities to overcome the language and culture barriers and I focus on how to solve a problem for a customer. You also have to keep at it and you do not expect to have that big sale at first. Exporting is a slow process. One expression I use in talking with suppliers about exports is selling for export is like making good barbeque: it’s low and slow.
To learn more about the counseling, training, and financial tools available to help your small business sell abroad and to find the offices located closest to you, please visit: www.SBA.gov/local-assistance