As the company gained momentum, they saw an opportunity to expand their business. The tea market in the U.S. was poised for growth — as is the direct sales model.”The biggest market is right next door,” Hatem Jahshan remembers thinking. “Why not go after it?”
Five years later, the couple appeared on Dragons’ Den and scored a deal with David Chilton and Jim Treliving, who they credit with helping the company break into the U.S. market. They now have consultants in every state, with 6,000 in total in North America. That impressive trajectory earned Tonia Jahshan the #8 spot on the 2015 PROFIT/Chatelaine W100 Ranking of Canada’s Top Female Entrepreneurs, while growing revenue a whopping 3,128% from 2009 to 2014 landed the company at #20 on the 2015 PROFIT 500 Ranking of Canada’s Fastest-Growing Companies.
Direct selling has helped the company to quickly expand while saving on overhead costs, but one of the biggest practical challenges they’ve encountered so far is actually getting their products across the border. “We had to relabel things [and] then we spent literally four to six months working with the FDA,” recalls Hatem Jahshan. “We would send shipments through and they would hold them. We’ve had shipments held for weeks because they were investigating our claims, our labels, just about everything.”
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The first step in setting up an exporting business is establishing a good relationship with the FDA and border services, Jahshan says. “Whenever you cross the border with a food product the expectation is they want to know everything about you and your product and they want to get comfortable with it,” he explains. “And then of course they slowly stop worrying about you and let more of the shipments go through quicker.”
Don’t forget, it’s still a human that gets to make the call on whether your shipment gets the green light. “It happened to us just recently, even though the same product has been approved, investigated, and crossed through many times before,” he says. “They held a skid with a whole bunch of orders on it to review some specific detail, which I know they’ve reviewed before and they’ve already approved and let go. I bet you that FDA agent had a bad day.”
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If your product does get stopped at the border, Jahshan’s advice is to be ready to respond to requests for additional product information as swiftly as possible—and it helps if you can anticipate what they will ask for. The Jahshans hired a consultant who had previously worked for the FDA to help them identify potential hurdles. Steeped Tea’s owners found their helper on their own, but shipping companies like FedEX offer a range of professional services or can point you in the right direction, Jahshan notes.
Some entrepreneurs don”t think hiring a consultant is worth the expense, but Jahshan says having access to an insider’s perspective was like taking out another form of insurance for his company. “The very worst thing you can do is to sell something to a client and not be able to ship it across, or ship it way too late.” That, he says, would do huge damage to Steeped Tea’s credibility.
The customs consultant opened their eyes to potential setbacks that they previously had no idea about. Food quotas, for example—the U.S. has a daily limit on the volume of dairy products it allows into the country, a red flag for Steeped Tea, which also distributes a limited range of appetizers. “It totally explained the fluctuations in duties” they were seeing, says Jahshan. “Learning from the consultant, doing our due diligence, it opened our eyes to a lot of things.”
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Other times, delays are simply inevitable. An outbreak of a food-borne illness, for example, will slow things down and there’s little recourse for exporters.
Just in case, the Jahshans devised a backup plan to keep the product shipments on schedule. Before officially launching their tea business stateside, they built up a six-month supply of product stashed away at a third-party warehouse in Buffalo, NY, a more cost-effective option than buying or leasing a private warehouse.
“We keep it fully stocked and whenever we have an issue we have the option of shipping from Canada or shipping from the U.S. And that’s our insurance policy basically,” says Jahshan. “Any time though we notice we can’t ship fast enough, we’ll switch over. Or if there’s an issue at the border we’ll switch over again.”
MORE WAYS TO RESOLVE YOUR CUSTOMS QUESTIONS:
- Why Your Business Shouldn’t Stop at the Border »
- How to Slash Your U.S. Shipping Costs »
- The Better Way to Navigate Customs »
- How to Speed Your Exports Through Customs »
- 5 Reasons To Be Optimistic About Doing Business in the U.S. »
What are your experiences with the FDA and U.S. customs? Share your stories by commenting below.