Boutique companies team up, go global

Partnerships enable even tiny bagel stores to sell their products abroad.

July 15, 2012 Crain’s New York
By Eilene Zimmerman
Samantha DiGennaro

Buck Ennis
EFFICIENCY: Samantha DiGennaro’s public relations firm partnered with London-based Eulogy to offer multinational services.

Like many growth-minded -entrepreneurs, Samantha DiGennaro, chief executive of DiGennaro Communications, sees plentiful opportunity overseas, despite turmoil in Europe. “There’s a lot of potential for global business, especially in this age of digital advertising, because that transcends borders,” said Ms. DiGennaro, whose boutique public relations firm, based in Manhattan, has 35 employees and more than $4.5 million in annual revenue.

Enter Adrian Brady, head of Eulogy, a similar-size boutique firm in London. A mutual client of both firms suggested that they join forces, and in January, DiGennaro and Eulogy formalized a partnership. Last month, Ms. DiGennaro and Mr. Brady met to devise a strategy for moving forward. That may involve going after global business together or looking for another small business partner in Asia or Latin America.

Meanwhile, they have been able to partner on multinational service and introduce each other to clients who need the other’s help. For instance, Eulogy recently paved the way for DiGennaro to work with its existing client, G2, an operating unit of international advertising and marketing services company WPP. Their arrangements have reduced the need for each company to travel to serve overseas clients.

“Working this way is so much more efficient,” said Ms. DiGennaro. And Mr. Brady appreciates the new ease of doing business in the U.S. “For years, we couldn’t offer clients a seamless support in a key market,” he said in an email.

DiGennaro Communications isn’t alone among local businesses in venturing overseas. The New York area ranks as the largest export market in the U.S., according to the International Trade Administration. Merchandise shipments totaled $85.1 billion in 2010, based on the most recent data from the ITA, and 58% of the state’s total merchandise exports came from small and -medium-size businesses in 2009.

Already contending with the high cost of doing business in New York, a small but significant number are turning to overseas partnerships to save on the expense of opening their own foreign outposts, say experts. “It’s a fantastic idea for small companies, which don’t have the resources of a midsize or larger company,” said Alexander Gordin, managing director at merchant bank Broad Street Capital Group and author of Fluent in Foreign Business.

Small businesses often see a substantial payoff from venturing abroad, according to Elizabeth L. Littlefield, president and chief executive of the Overseas Private Investment Corp., a U.S. government agency that, among other things, provides financial products like direct loans to help American businesses expand into emerging markets. “Research has shown that small businesses that invest abroad have much higher survival rates and much higher productivity and pay than those that don’t,” she said.

Of course, overseas partnerships require trust and careful planning. Ms. DiGennaro said that she and Mr. Brady decided to determine how fees are split on a case-by-case basis. Sometimes, the two firms will bill separately for their combined services. “In other cases, we will have one central billing structure,” she said. Both companies agreed to forgo formal fees for referrals, which they see as a way to foster good will between their firms.

Demand for New York specialties

Mr. Gordin said small businesses often partner on an informal basis with potential foreign counterparts, though many eventually formalize these relationships. Demand for products considered New York specialties has created opportunities for neighborhood businesses to sell their wares through foreign shops, he noted. “Even bagel places on the corner are exporting all over the world,” he said.

The hankering for New York-branded products is what helped propel Danielle Malka’s company into the Russian market. Ms. Malka is the founder and president of eShave New York, a brand of luxury shaving products with two retail outlets in the city, 16 employees and about $2 million in sales last year.

In May, Ms. Malka awarded exclusive distribution rights for eShave’s products to Regency Ventures in Russia. “We also gave them the right to open and operate eShave New York stores in Russia,” she said.

The first kiosk is slated to open in Moscow in the middle of this month, with three more due to open by the end of September.

Although eShave’s products are distributed in 17 countries, they aren’t sold through stores with the eShave brand name, as they will be in Moscow. “It will be our name and our voice out there, and this is part of our thinking about expansion,” said Ms. Malka. “We want to have a bigger impact in the international market.”

A version of this article appeared in the Jul. 16, 2012, print issue of Crain’s New York Business.

Read more: http://www.crainsnewyork.com/article/20120715/SMALLBIZ/307159989#ixzz20hCcvBWR

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

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