How Exporting Can Hedge Your Business Against Risk
“Don’t put all your eggs in one basket,” is a well-known proverb and good, grandmotherly advice. In the modern marketplace, Grandmother’s wisdom goes by another name: hedging.
Big businesses hedge all the time, especially with resources that are critical to sustaining their business model. But how can a small business benefit from hedging? The answer is exporting.
In our global economy, financial conditions constantly vary between countries and regions. At the moment, the European Union economy is not great, while the U.S. is coming back. South America seems to be emerging as China recently reported a trade deficit.
Historically, small businesses focused on their country of origin by necessity. But today your small business can create an export strategy that provides a hedge against slowdowns in the domestic economy. And, when the global economy improves across more boundaries, as it will, your export hedging strategy can become your business-growth strategy.
Why can small businesses hedge more easily today than ever before? First, let’s look at what we know about your export prospects.
As a small-business owner, you don’t need to conquer the world to justify a successful export strategy. With 7 billion prospects on planet Earth, it shouldn’t be too difficult to find sufficient global customers outside your country.
We know a lot about our global neighbors that will help define an export strategy. For example:
Over half of Earthlings are urbanites—and city folk use different stuff than their country cousins.
For the first time in history, the world’s largest employment sector is services, not agriculture. Manufacturing places third.
English is the international language of business, but it is the first language of only 5 percent of global prospects.
A growing global middle class means more-affluent consumers.
Computers are luxuries for most of the world’s population. But cell phone usage is exploding across the globe. Billions who have never used the internet will soon do so with a smartphone, which means they can buy stuff on your mobile-friendly site.
Finally, let’s focus on how American businesses can use two of the resources the U.S. government has created to help small businesses execute their export model—and get paid.
The U.S. Commercial Services, a division of the U.S. Department of Commerce, is a virtual one-stop shop for developing and executing a small-business export strategy. They offer a great website (export.gov); a toll-free number (1.800.872.8723) answered by a real person; more than 100 offices around the U.S., plus dozens more around the globe, where you can drop in to ask for help; and their book, A Basic Guide to Exporting, includes an excellent tutorial and several case studies. All of that help is free, with the exception of the book and any direct expenses incurred on your behalf.
The Export-Import Bank of the United States (exIm.gov) can help you get paid. Ex-Im Bank will coordinate funds transfers, provide loan guarantees, and even offer pre-delivery working capital for you and post-delivery financing for your customer.
For generations, big companies exported to grow their businesses and hedge against regional economic downturns. Today, with the help of evolving demographics, new technology and government support, small businesses can join this elite club.
Write this on a rock: The global marketplace is waiting for you.
Jim Blasingame is one of the world’s leading experts on small business and entrepreneurship. He is the creator and host of the weekday radio program “The Small Business Advocate Show.” Jim is also a speaker, a syndicated newspaper columnist, and the author of “Small Business is Like a Bunch of Bananas” and “Three Minutes to Success.”
Note: The opinions expressed in this article are those of the author and do not necessarily reflect the views of FedEx.
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