With the U.S. economy still fairly stagnant, more small businesses are turning outside the U.S. to grow their sales. Some 64 percent of small-business owners report having sold products or services to customers outside the U.S., up from 52 percent in 2010, according to the latest NSBA Exporting Survey. What’s more, a growing number of businesses that don’t currently export are interested in starting to export (63 percent, up from 43 percent in 2010).
What benefits do entrepreneurs get (or expect to get) from exporting? Increased sales and profits, a diversified and expanded customer base, and more stability in a time of U.S. economic difficulties were the top benefits cited. And exporting does not have to be limited to products: While more than half (52 percent) of exporters in the survey sell products, 30 percent sell a combination of products and services and 18 percent sell services only.
Exporting has significant effects on a company’s revenues. While 54 percent report that exporting accounts for less than 10 percent of sales, 34 percent say it makes up between 10 and 50 percent of sales and 12 percent say it accounts for more than half of revenues. Half of respondents say their export volume has increased in the last five years; of those, nearly one-third—29 percent—reported increases of more than 10 percent.
While the increased interest in exporting is good news for the U.S. economy, small businesses still face some significant challenges when it comes to expanding globally.
So what’s holding non-exporters back?
- Don’t know enough/not sure where to start: 46 percent
- Don’t have goods or services that are exportable: 30 percent
- Worried about getting paid: 26 percent
- Too costly: 20 percent
- Lengthiness and time consumption of getting visas/work permits: 16 percent
- Insufficient protection of intellectual property rights: 14 percent
- Can’t get financing to offer foreign customers: 14 percent
- Would take too much time away from domestic sales: 12 percent
Even among exporters, there are challenges. Forty-one percent cite worries about getting paid, 29 percent say exporting is confusing and difficult, and 21 percent are concerned that it takes too much time away from domestic sales. Nineteen percent say it’s costly and 14 percent cite problems being able to offer financing to foreign customers.
While small-business owners clearly have a lot of interest in exporting, there’s a lack of knowledge not only of how to do it, but also of where to go. The assistance program that had the most name recognition was the Small Business Development Centers, but even so, only 58 percent of non-exporters were aware that SBDCs can help with exporting. Other programs, including the U.S. Export Assistance Centers and the Department of Commerce’s Gold Key program, had much lower awareness.
If you’re interested in exporting, here are three steps to take:
- Start small. Canada is by far the most popular destination for U.S. exports—27 percent of exporters sell there, up from 16 percent in 2010. With a common language, shared border and lower transit costs, Canada is a great starting point for novice exporters. Beginning with a country where customers speak English and that has a similar business and consumer culture will greatly simplify your ease of entry.
- Protect yourself. Payment is a worry for the vast majority of exporters, with 40 percent calling it a “very significant” concern and 37 percent saying it’s “somewhat significant.” That’s why 69 percent ship only on receipt of payment and 32 percent require a bank-issued letter of credit. Work with your bank to determine how they can help you protect your business and ensure payment.
- Get help. The report lists nearly a dozen sources of export assistance—but, if you’re like the respondents in the survey, chances are you haven’t heard of all (or even most) of them. Check out Export.gov for a one-stop shop that links you to government resources.
In 2012 exporting was a $2.2 trillion market—up 39 percent from 2009, according to the study. That’s a huge pie. Don’t you want your piece?