Need a New Years Resolution? Take YOUR Company to the Next Level in 2017!
As managers plan for a new year, they inevitably look for new markets and growth opportunities. Don't let another year go by with missed opportunities! When small and medium enterprises begin export initiatives they unlock access to new revenue streams and diversify their risk in their own domestic market, all while continuing to grow their market share on both fronts. Small businesses account for the bulk of exporters in the U.S. and with many local state and government initiatives to stimulate exports, GREAT opportunities continue to be available to the small business owner.
As we approach 2017 one macro-economic reality will be glairing to the U.S. business owner: stagnation. The U.S. GDP will only moderately continue to grow with its 2-3% growth in the coming year. Likewise, many other developed nations are facing stagnation to moderate growth in the coming future. Great Britain leaving the E.U. is a perfect example of how developed nations are looking for new policies to break the cycle. However, in the developing world growth is raging. India is assumed to grow between 7 - 8% while other developing nations such as Egypt are projected between 3 - 4% growth. As oil-dependent economies are shifting from oil based economic GDP growth to non-oil GDP growth only more opportunities are on the horizon. Saudi Arabia alone is projecting to grow in non-oil GDP by 2-2.5%.
Managers will do best to have an open mind, maintain a wide view of markets both global and domestic, and keep all options on the table. Fear of global markets and taking on risk (which can be managed or mitigated) will only hurt the small to medium enterprise in 2017. The domestic U.S. market is a great place to keep the status quo with its moderate growth and natural unemployment, the economy should be fairly healthy and a stable place to maintain revenues. However, if a company is ready to expand to the next level and take on global markets, it will only increase opportunities and make 2017 the best year ever.
Make 2017 your business's year to go global! GSCS is here to help, check out our Go Global Cruise to jumpstart your global initiatives!
People as well as companies tend to value security and safety above most things, unless however you are a teenage male with a brand-new Ford Mustang or something, then risk management tends to go out the window. However, managers generally have no choice or desire but to manage risk and mitigate it for profit maximization and asset protection.
Risk aversion can be a number one cause of crippling growth when managers are too risk adverse and when managers are not careful enough, the consequences are generally more painful than the lack of growth alternative the risk adverse manager experiences. Therefore, getting risk management right is crucial. The majority of companies that should be exporting and taking on global initiatives tend to be too risk adverse and therefore are not exploring new options. When companies do not take on global markets they then actually take on more risk because they are not hedging against their "safe" domestic market. Managers see the foreign markets as too risky and choose not to engage in global markets. Of course, there are risks when going into global markets, however like most things in life risks can be transferred and therefore mitigated.
Why is it that pure risk can be mitigated when driving, or when someone passes away, or if someone breaks in to your house and steals things, but when it comes to our accounts receivable for international sales, pure risk lies directly on the manager’s shoulders?
Well as a matter of fact, it doesn’t! Both the EXIM Bank and the SBA have products that insure against accounts receivable, or many financial institutions offer products like letters of credit and other forms of risk management that ensure payment. Granted no company would prefer to rely on these things to ensure the success of their exporting venture and carefully vetting business partners still is part of conducting due diligence, but when push comes to shove, they are available and the fear of going into new markets is irrational.
If you are dealing with international risk and need a hand, contact us and let’s get started!
Kirk Galster, M.S, M.B.A. is an international business services professional. With his extensive experience and background in International Studies, Law, International Business, and Economics he is a great asset to any international management team.