Although small businesses start out fulfilling a need within their community, the ultimate goal of every business is to sell more and make more profit. This is a key role that international trade and exports can help fulfill.
SMEs that get involved in the global marketplace obtain a unique opportunity to enter very lucrative markets, cater to a massive customer base, growth hack their business, and improve their community while at it. Here are some of the most compelling reasons why SMEs should become exporting companies:
Access to the most lucrative markets: Although local trade brings the opportunity to enter a stable, easily accessible market, the greater gains are abroad. The vast majority of the world’s purchasing power is in foreign markets (at least 2/3 if you’re in the US4), and export trade allows you to get a slice of this. In countries and regions with an industrialized economy – like China, South Korea, Europe, Australia, and Canada – it is more than likely that local production already exceeds consumption. By taking those goods to foreign markets, you gain an opportunity to get higher sales at potentially more favorable costs.
Expand your customer base: The more significant majority of your potential market will be in foreign countries at any point in time. For instance, the US Department of Commerce estimates that 96% of the world’s customers are located outside of the US.5International trade gives you the means to reach these customers and potentially expand your client base. Thankfully, with the increasing profile of e-commerce, reaching these customers is not only easier, but it is also more profitable than ever before.
Scale your business: Adding an export category to your small business can be the next frontier in your growth strategy. With the potential to access bigger markets and a larger customer base, global trade presents excellent opportunities for business growth. The access to new markets can provide the impetus to outstrip competitors and acquire a more significant market share for your business, both locally and internationally.
Build resilience: Statistics indicate that export SMEs are 8.5% less likely to fail,6 and there are obvious reasons for this. The broad geographical reach that an international export business provides can insulate your business against disruptive events like natural disasters, political unrest, etc. In addition, the export sales and added jobs that international trade brings will help protect your company against the usual challenges that cause business failures, such as failing revenue, poor product reach, and the like.
Extend product life cycle: Jaded local products might find a new lease of life internationally. Export successes can help refresh the product, especially in less developed or growing markets. Apart from reaping additional revenue from extended sales, your business will also be providing products that cater to local needs and might represent an improvement in local offerings.
Leverage economies of scale: Growing businesses will need greater quantities of raw materials, resources, and supplies, leading to potential cost reductions. As your input demand increases, you can access economies of scale, meaning you pay less on input materials as you produce more. In the long run, this will translate to higher revenue figures and, ultimately, higher profit.
Improve your community: Finally, it is essential to recognize that international trade can drive local growth, both in your business and society. Your export business can help provide jobs within your community, an increased tax base that helps provide public funds, and a positive for your country’s international trade balance.
The bottom line is that starting an international export business can produce a net positive overall for your small firm, employees, and community. You gain the opportunities, and the support (which many don’t know about), to grow your business and produce better returns for those that rely on you.
Source: Alibaba
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