As the world continues to become more globalized, the opportunities for small business owners are extraordinary. Exporting for the small to medium enterprise (SME) is not only the trend and undisputed reality of globalization, but has become necessary for ensuring survival and success. Although other options exist for reaching foreign markets such as investing abroad and manufacturing while hopping over tariffs, exporting is by far the most attainable for the SME. Despite the resources necessary for export in terms of financial, managerial, and organizational, exporting is accessible both to the large firm and ever increasingly to the small alike (Majocchi, Bacchiocchi, & Mayrhofer, 2005). Although it is disputed whether the size of the firm will determine success for export, one thing is virtually undisputed that experience is a crucial variable influencing a firm’s ability to export. This is where GSCS can assist to get behind the power curve while training internal expertise. Research demonstrates that a positive relationship exists between export intensity and firm size by number of employees meaning the larger the size of the firm the more resources it has, it can (obviously) export with greater intensity. However, when comparing firm size by volume of sales, the relationship was negative. The numbers also suggest that firm age, meaning experience, is a major player (Majocchi, Bacchiocchi, & Mayrhofer, 2005). With these realities, the small firm should not shy away from exporting, but instead should realize the implications of acquiring the necessary resources. This research as well as the sheer number of small businesses that are already entering global markets compared to large firms indicates that it can be done and even done more often for the small firm and that it is not entirely impossible when compared to large firms.
According to the Small Business Administration
When small businesses look to export, they can increase sales and profit, reduce dependency on domestic markets, and stabilize seasonal fluctuations. After all:
Given the firm data of the benefits of exporting, small businesses should look to begin and start planning at an early stage.
Global Strategy Consulting Services is glad to assist with the initial steps of exporting, our FREE global scan will give your company a clear idea of 15-25 markets that your company could begin looking at. We use trade statistics, export data, and your product information to give you a printout of exports entering other markets with the same or similar products as yours for the last 5 years with a percentage of increase or decrease with the last two years. (Contact us for your FREE global scan!)
Our market analysis will go much deeper on specific countries and with a flat rate of $1000.00 this becomes a very cheap way to gain a lot of knowledge about your top market choices. We will also give you a free 1 hour consultation to assist in the steps necessary prior to the market analysis.
Our “Go Global” Cruise will give you powerful insights on exactly how to start your internationalization initiative with decisive action steps.
What are you waiting for, contact us and let’s get started today!
Delehanty, P. (2015, December 1). Small Business Key Players in International Trade. Retrieved from www.sba.gov: https://www.sba.gov/sites/default/files/advocacy/Issue-Brief-11-Small-Biz-Key-Players-International-Trade.pdf
Majocchi, A., Bacchiocchi, E., & Mayrhofer, U. (2005). Firm Size, Business Experience and Export Intensity in SMEs: A Logitudinal Approach to Complex Relationships. International Business Review, 719-738.
SBA. (n.d.). Explore Exporting. Retrieved Jan 12, 2017, from www.sba.gov: https://www.sba.gov/managing-business/exporting/explore-exporting
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!