Seems my whole life, I have “lived” small business, as my grandfather owned an accounting firm and my stepmother owned a barbershop.
I grew up watching them run their small businesses. At times, it wasn’t easy. I remember them telling me it was always rewarding. And, I personally have spent over a decade supporting small businesses. While many small businesses are in survival mode during the current economic downturn, there are still strategic decisions that can be made, which may have a positive impact on this year’s bottom line. Small business owners may want to diversify their market base by exporting their products or services.
Small businesses account for 30 percent of all U.S. exports — a staggering $500 billion per year. The fastest growing segment of U.S. exporting companies are firms with 20 or fewer employees, demonstrating that size is no longer a requirement for success in global markets. The following are six reasons why small firms should consider exporting as a way to expand sales base and lessen the effects of a down economy.
1. Market growth. A look at world demographics will find that 96 percent of the world’s population is outside of the U.S. If a small business has a product or service to sell, expand where the buyers are. Increasingly, that is outside the United States.
2. Economies of scale. If a firm has excess production capacity, it will be marginally less expensive to produce 500 units than 400 units, and expand sales into new overseas markets.
3. Extend product life cycle. A product that may be nearing obsolescence in this market may still have demand in another country. Or, by licensing the technology to an overseas producer, a company could continue to generate a revenue or royalty stream from the product through off-shore production.
4. Moderate seasonal production cycles. Any company that produces products related to the seasons — such as camping gear or ski equipment — is aware that there are two summers and two winters every year. By selling seasonal products south of the equator during the off-season, for example, a company could moderate seasonal fluctuations in its production cycle.
5. Faster growth, higher profits. A comprehensive study has been done that shows exporters tend to grow 22 percent faster than non-exporting companies, have higher profits, and stay in business longer. Exporters are winners, by definition, because they have shown that they can successfully compete in global markets.
6. Competition. The U.S. market is extremely competitive compared to many other countries around the world where market share might be easier to obtain and profits might be higher. A small business might explore international opportunities in response to its chief domestic competition doing so.
International trade can benefit everyone, by lowering cost and making economies and companies more productive and competitive. The U.S. Small Business Administration has a number of programs and services to help entrepreneurs expand their business international.
Learn more
For additional assistance, contact Pru Balatero, International Trade and Finance Officer, (Pru.balatero@mail.doc.gov), U.S. SBA: 206-663-0051.
Calvin W. Goings the U.S. SBA’s Region 10 Administrator based in Seattle. He can be contacted at 206-553-5231.
