Small and mid-sized businesses are doing important work of delivering value to their customers, creating jobs and strengthening communities. Yet factors such as trade, geopolitics and the unpredictable global economy are beyond the control of business owners. Business owners may be able to take back some control and buffer their businesses against these factors by exporting.
Balancing Uncertainty and Optimism
Widespread talk of trade disruption worries businesses. The 2018 Global SME Pulse by American Express and Oxford Economics surveyed 3,000 senior executives across 12 countries and found 47% of SMEs (54% among U.S. companies) report being generally confident about the global economy for the year ahead (up from 23% in 2016), yet, 17% of exporters list political and economic uncertainty in export markets as their top concern.
Companies that persist despite the concerns are rewarded. Nearly a quarter (24%) of SMEs that are currently exporting are seeing solid returns and planning further expansion. In fact, among exporting SMEs, international expansion is the top growth priority (ahead of domestic sales and efficiency savings) for the next three years, and they anticipate slightly faster revenue growth (7.7% vs. 6.7%) and higher profit margins (6.2% vs. 5.6%) than their non-exporting peers.
Digital & Traditional Approaches to Global Growth
The report also found that only 16% of SMEs believe that it’s easier to access new markets than three years ago, but there are a number of common tools and techniques used by successful exporters to expand their businesses globally. The vast majority of exporters said they (79%) focus on building market intelligence as the foundation of their global work. Many also leverage government programs like the U.S. Department of Commerce’s Export.gov (40%), work with agents (47%), open representative offices (43%), and partner with local or multinational companies (32% & 21%, respectively).
Manufacturers may be surprised by the impact of their digital marketing efforts on global expansion. The internet is increasingly powering export growth, as evidenced by a recent American Express Grow Global Survey of U.S. exporters. Nearly half (48%) of products exporters in the study reported that they began selling internationally when interested buyers found them online. Because of this, many manufacturers rely heavily on their websites to attract new global customers, and it is the tool that 52% of them use when starting to research markets and potential overseas partners.
Companies considering exporting often turn first to research sources like the CIA Factbook and Department of Commerce’s Country Commercial Guidesfor information like research of market factors like population, per capita income and import volumes of related product categories. Later their own website metrics provide valuable insights specific to their product or service. Evaluating the location of inquiries and website traffic allows companies to focus on areas of actual interest to avoid speculative investment and to develop more focused global sales efforts.
Supporting the Goals of Fast-Growing SMEs
Exporting has the potential to help businesses increase revenue and profit, as well as meet other important business goals like talent recruitment and retention, and potential product and business innovations. In the Grow Global survey, 43% of the exporting companies reported that their global business activities had helped them to attract good talent. Additionally, more than a third (35%) cited their experience in international markets as helping them to adapt their products and business practices to deliver better value to their domestic customers, as well as helping them sell more globally.
Selling internationally is becoming more and more accessible thanks to internet sales, promotion and web analytics tools, in addition to publicly available resources from experts and other companies who have successfully expanded globally. Companies should consider exporting as a key strategy for meeting important long-term business goals.