Who can forget that first trip abroad? Even if you’ve never traveled far from home, you can imagine being full of both excitement and trepidation: How will I communicate? Will it be difficult to get around? What’s the exchange rate?
Deciding to export your products or services can conjure up similar emotions. The reality is, your business website gives you a global presence. So whether you’ve strategically planned to begin exporting or had a global opportunity fall into your lap, success in global business might be even more accessible than you realize.
In the 2016 American Express Grow Global Survey of small and mid-sized U.S. companies that sell goods and services internationally, 80 percent of respondents say revenues are greater compared to one year ago. Companies are also optimistic about the future forecast. In fact, more than three quarters (76 percent) anticipate their revenue from global sales will increase by about 30 percent on average over the next five years. So what’s holding you back?
Spanning the Globe
The sales efforts of U.S. exporters surveyed are mostly concentrated in Mexico or Canada (43 percent) and Europe (29 percent). When asked to look ahead, exporters predicted Mexico and Canada to be the region with the most potential for exporting sales over the next five years (34 percent), followed by Asia (24 percent)—particularly China, Japan and Korea.
—Ed Marsh, founder, Consilium Global Business Advisors
Every industry and company may view market opportunities differently, but the data suggests that Asia is viewed as an area of opportunity for the future. At the same time, the data does reveal that exporters see regions they’re already exporting to or those closest to home as possessing the greatest growth potential.
Whether the best opportunity for your company is across the pond or closer to home, survey results suggest considering the following as you get going:
1. Leverage all available resources.
Over one-third (37 percent) of exporters feel they have insufficient knowledge of international markets, and three-quarters (75 percent) are concerned about building relationships with foreign partners. There seems to be an unmet need for knowledgeable exporting resources for businesses.
But successful companies recognize they need help and seek it out. A majority of respondents rely on their network (71 percent) or the websites and marketing materials of potential trade partners and customers (64 percent). Other resources exporters sought out when considering their operation include market research reports (54 percent), news publications (47 percent) or advisory firms (40 percent). The internet also puts market and partner research and business development at your fingertips. And to complement all of this research, I suggest traveling to markets under consideration, which can be a crucial part of vetting strategic plans, finding complementary in-market partners and gaining insights into cultural and regional operating procedures.
That said, I’m always amazed by the resources offered by the U.S. Commerce Department, U.S. Export Assistance Center (USEAC) and similar state-run programs. A third of exporters rely on government programs to obtain knowledge (33 percent), because these trusted sources offer the expertise and guidance of trade experts, exporting officials and other business leaders to help you navigate the benefits and challenges of doing business internationally. Many of them have run successful exporting initiatives themselves—they’ve walked the talk.
2. Research the investment needed.
As of 2014, less than 1 percent of U.S. small businesses and 5 percent of middle market companies export, according to a 2015 report by American Express and Dun & Bradstreet, based on findings from nearly 19 million businesses in Dun & Bradstreet’s commercial databases. According to the International Trade Administration, more than 70 percent of the world’s buying power exists outside of our borders. That represents a huge growth opportunity, but what type of investment is required?
A majority of exporters surveyed in the 2016 American Express Grow Global Survey (63 percent) sought financing in order to grow globally. In fact, over 80 percent say they used a variety of working capital and receivables financing tools to supplement commercial finance products for growth in foreign markets.
To find specific investment needs for your industry and company, consider seeking out the right advisors to help provide suggestions on how to plan and manage your global growth investment.
3. Understand the benefits beyond sales.
More than a quarter (26 percent) of exporters surveyed said their revenue growth can be linked to international sales alone. But increased revenue is just one of many upsides to making the leap into international sales: The U.S. International Trade Commission finds exporters often pay higher wages. Companies making sales overseas can help to improve domestic operations and develop new products or services. And, exporting may give you an advantage when recruiting for future talent.
If you’re reading this today, you may already be considering that first trip abroad and may be in the early stages of planning. As they say, there’s no time like the present.