By JUSTIN LAHART

Husband-and-wife business partners Matt and Rene Greff are on track to open the first out-of-state branch of their Michigan brewpub later this year—in Bangalore, India.

Brian Widdis for the Wall Street Journal Matt and Rene Greff, at right, plan to open a brewpub in Bangalore.

At Peter Frykman’s Palo Alto, Calif., irrigation-equipment company, seven of the 20 employees are located outside the U.S., in China and India, while Gangesh Ganesan’s communications-chip firm, in San Jose, has about a quarter of its staffers in Istanbul, and others in Tokyo and Taipei.

While big companies have been the trailblazers of globalization, a growing number of relatively small businesses are following in their footsteps. Like their larger counterparts, they are drawn by new markets that are often growing much faster than those at home.

Their forays abroad are made possible by technologies like file sharing and video conferencing, which allow managers to communicate easily across continents. Though these technologies aren’t new, their price has fallen sharply over the past decade, putting them within reach of more companies.

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DriptechPeter Frykman, in hat, demonstrate’s Driptech’s irrigation gear in India.

Still, crossing borders doesn’t come easily. Advances in technology haven’t done away with the need for small-business owners to spend face time with employees and clients in other countries. PharmaSecure Inc., for example, is based in Lebanon, N.H., but Chief Executive and co-founder Nathan Sigworth says he has been spending more time in India, his primary market, than at home.

Venturing abroad also requires small companies to put a lot of care into choosing the employees or local partners who will represent their interests overseas. The task often requires bridging cultural differences and navigating complex and unfamiliar bureaucracies.

The Greffs, in Ann Arbor, Mich., were skeptical when Gaurav Sikka, a former University of Michigan student, approached them last year about opening a brewpub in Bangalore. Mr. Sikka, a native of India, was a regular at the couple’s 200-seat Arbor Brewing Co. The couple had recently opened a small brewery in nearby Ypsilanti, and worried about stretching themselves too thin. “We said no, we don’t have any time or money,” recalls Mr. Greff. “He said: ‘Don’t rule it out of hand.’ ”

The Greffs traveled to India, where they came to believe Mr. Sikka’s idea was feasible. They found that southern India had a beer-drinking culture, as well as lots of U.S.-educated professionals, including plenty of University of Michigan grads. Moreover, it was an untapped market for traditionally crafted microbrews like the ones the Greffs serve in Michigan.

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Credit: DriptechFarmers watch the installation of a Driptech irrigation system. The system is designed as a low-cost means of delivering water to crops

Now, a group of local investors, led by Mr. Sikka, is supervising arrangements for the Bangalore opening. The Greffs will have a stake in the new brewpub, and will receive consulting and licensing fees.

According to the Census Bureau just 2% of U.S. companies with fewer than 100 employees sell their goods in overseas markets. Though there are no hard figures available, the number of small businesses that have invested directly in overseas operations, which typically requires a bigger financial commitment than exporting, remains relatively small. But it is growing, says Larry Harding, president of High Street Partners Inc., an Annapolis, Md., company that helps small firms set up foreign offices. A year ago, he says, his company was working with about 200 companies; now it’s working with more than 300.

“There’s an explosion of 50- to 100-person companies that are going overseas,” he says. “We’re not even scratching the surface.”

Mr. Frykman, the irrigation-gear executive, was part of a group of Stanford University graduate students who in 2008 came up with a method for making drip irrigation systems inexpensively. After testing them in Ethiopia, “we saw that this could help farmers across the world,” he says. He put his plan to get an engineering Ph.D. on hold and formed Driptech Inc.

A pilot project in India went well and caught the eye of Chinese officials. In 2009, the company made its first sales, in India and China, and began to seek angel investors. Last spring it raised $900,000 in funding.

Seven of Driptech’s employees are now working in its offices in Beijing and outside of Mumbai, and Mr. Frykman expects that within a few months half of its workers will be overseas.

Having offices in three countries is a challenge, he says, but thanks to the revolution in communications technology he is able to hand off work in the evening to his co-workers in Asia, and pick it back up in the morning. “If you get the rhythm right, you can really be working around the clock as an organization,” he says.

PharmaSecure got its start in 2007 when Mr. Sigworth and his friend Taylor Thomson came up with a low-cost way to combat counterfeit drugs, a big problem in the developing world. PharmaSecure’s system, which combines mobile-software apps and databases, allows customers to send text messages containing the codes printed on drug packages and get a reply indicating whether the code is legitimate.

After a year of traveling, the partners decided that India, the source of much of the developing world’s drug supply, was the best place to begin. Now, most of the company’s 15 employees work out of New Delhi.

Mr. Sigworth says the ability to communicate cheaply has been crucial. “We use [Internet telephone service] Skype a lot; we use email a ton,” he says, but he adds that just as important has been the company’s ease and comfort working across cultures.

Born in Germany, Mr. Sigworth grew up in Connecticut, and spent summer breaks from high school working in Botswana. Many of the company’s Indian employees went to U.S. universities or have worked for major U.S. multinationals.

Ubicom Inc., which produces chips for products such as wireless routers, made its first international foray three years ago when it tapped a Turkish employee to start an office in Istanbul. Now about 20 of its 85 employees work there. Ubicom also has offices in Taipei and, as of this month, Tokyo, as well as a group of engineers in the U.K.

To videoconference, chat and work together on projects, Ubicom’s offices use technology that would have been too costly for the company a decade ago, says Mr. Ganesan, the CEO. He adds that he doesn’t think a company like his can do without an overseas presence.”Even though we’re a small company, our customer base is truly global,” he says.

Jack Donnelly is unique. He can’t wait until he graduates to launch his own venture. Literally he cannot wait. He is launching a new Monmouth Nightclub in March that will feature a state of the art sound system, lights, and an entertainment forum for college students under 21 years old. Come today to McMike 308 at 4pm to hear Jack speak about his start-up.

Mike Connell wrote the following:

In the neo-classical economics of macro and micro economics, the market immediately and costless moves to the new equilibrium of supply and demand.  There is no room for risk, cost, delay, and mistakes — it is a world of perfect information and frictionless movement. This is not the real world; this is a model.  In the real world, there are costs to moving goods around and staring new firms and acquiring information.  These costs prevent all the possible voluntary exchanges that could occur from actually occuring — some amount of potential wealth remains uncreated — in business terms you might say that “money is left on the table.” This gap between what is possible and what actually happens creates an opportunity for business. 

 An entrepreneur can step into this gap and offer a service for a price.  The entrepreneur has some special talent or ability (or economy of scale) that allows the entrenpreneur to efficiently produce the good or deliver the service.  If the price is low enough and the value created is large enough, there will be a viable market for the entrepreneur.  One of the frictions that entrepreneurs can often provide efficiently is the services of a middleman. Recently my Midwest Entrepreneur’s class has had two such middlemen speak about their business. 

 John Twomey is a grain dealer/handler in Western Illinois.  The farmer could (and some do) deliver their grain to the ultimate user or the barges at river — that is a costly thing to do and an activity at which the farmer has no particuliar comparative advantage.  Given this real world cost, there is an opportunity for an entrepreneur/middleman.  Someone (John Twomey) can offer the service of collecting the grain and moving it closer to its ultimate use more efficinently than the farmer can because of economies of scale and specialized knowledge.  In the real world, John Twomey is a part of the process that causes the market to jump to the new equilibrium price and quantity. 

 Rod Smith is a Monmouth entrepreneur that buys auto parts and sells them on eBay.  NASCAR teams routinely replace all of the parts on their race cars with new parts even when the old parts are still working — often after only one race.  These slightly used parts are highly valuable.  The NASCAR teams could (and to a limited extent do) resell these parts in the secondary market.  Selling used car parts in the secondary market is a costly process that requires specialized knowledge.  Rod Smith travels to North Carolina and buys such parts wholesale in bulk.  Then he sorts, cleans, advertises, sells and ships these parts to buyers in the US and all over the world.  He can provide this service more efficiently than the NASCAR teams.  He helps the market move goods from lower valued uses to higher valued uses and creates wealth for society and a profit for himself in the process. 

 These men are both good examples of entrepreneurial middlemen that exist in the real world but not in the supply and demand models of microeconomics.  Remember that an entrepreneur is an individual that sees an opportunity and takes personal risk to supply a good or service to society.  Entrepreneurs and middlemen are the grease that help reduce the friction of the market and move society to a better place. 

Below are my summary notes from Rod Smith presentation on Tuesday afternoon while a blizzard raged outside: Rod used his extensive contacts in racing, positive cash flow, increased appetite for risk , buying more in bulk and more expensive parts to fuel growth from just over $100,000 in sales to $240,000 in annual sales. The NASCAR racing teams know Rod will buy practically everything they have to sell.  They keep a big bin for him at the major racing team assembly facilities. Plans to go to $500,000 annually in 2011 or 2012. Wife does all of the shipping and had to quit her day job to support his business. Attended Monmouth College in the early 70’s. Raced his own car three or four times a week and met many people in the racing fraternity over the past 30 years.

Bought 20 Richard Petty racing, Dale Earnhardt Racing, Hendrix Sport, and Childress Racing engine blocks (He is on the super “high trust partnership” with that account) and plans to make profit selling the items at a 100-300% mark-up. Usually buys from about 70 NASCAR teams and even broker new stuff to teams in less. Never hired an attorney or used an accountant. Buys by the pile because he knows what he sees. Made $81,000 in two months during December and January, 2011.  He keeps the parts for two years top (of the line Chevrolet racing engines) when product development restrictions kept Rod from selling it immediately. Five local competitors vie for the same items, but he cooperates with most of them.  What scares him most? Fuel costs. It could ruin his business.

Smith said “It is fun to see big gains that usually happen when things sell on Sunday”. Why? Evidently the real eBay buyers come out to buy on Sunday.