Exporting: The Future of Small Business?

By Jeff WuorioBusiness on Main

Futurallia focuses on getting entrepreneurs to think globally. Find out why exports are the next big thing for small businesses.

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When some 800 entrepreneurs from 30 countries gather for Futurallia — an international business development forum in Kansas City this May — they'll be discussing issues that are central to the success of tomorrow's small businesses.

Not surprisingly, that means learning to think globally. The conference is geared toward helping small- and medium-sized business grow and expand their reach — especially in international markets and through exporting.

That may run counter to the persona of mom-and-pop neighborhood businesses, but exports are often an overlooked element to entrepreneurial growth and success. In fact, the Wall Street Journal reported that U.S. trade officials will be targeting small businesses in their plan to double American exports in the next five years, and they believe this could help boost small-business sales and overall job creation.

Still not convinced? Here are six reasons why you may want to begin crossing a few borders with your small business:

The numbers make sense. Estimates hold that 95 percent of the world's customers and more than 70 percent of the world's purchasing power are located outside of the United States. Simply put, any small business that doesn’t at least consider an overseas market is bypassing enormous opportunity.

Exporting is no longer just for the big players. If you assume exporting is just for business behemoths, think again. Census data suggests some 280,000 U.S. companies export; two-thirds of that group comprises very small companies (20 employees or fewer).

Moreover, not only are overseas markets seen as powerful vehicles to growing a small business, but entrepreneurs are also starting to dismiss the idea that experience in local and domestic markets is a prerequisite for success. "'Born globals' are on the rise," notes Charles Matthews, professor of entrepreneurship at the University of Cincinnati.

Access through technology. Technology has opened up borders for all sorts of small businesses. Michael Katz, owner of the five-employee portfolios-and-art-cases.com, an online dealer of portfolios and presentation supplies, points out that the Internet has eliminated the need for a representative based in a foreign country.

"Before the Internet, selling to overseas customers required finding a reliable distributor in every country or region where you want to sell," he says. "For us, this proved to be an almost impossible task. We would talk to potential distributors at trade shows, but they would almost never follow up or maintain their interest after returning to their home countries."

An overseas market lends stability. As a diversified investment portfolio can handle volatility better than more focused holdings, so too can exporting offset challenging domestic conditions. Karen Kurek of the tax and business consulting firm RSM McGladrey notes that companies with a global presence and exporting capabilities weathered the recession better than companies that didn't export globally.

Todd Miller, president of Classic Metal Roofing Systems in Dayton, Ohio, says exporting has proved to be pleasantly predictable: "We've found that export accounts tend to be very loyal and also fairly low cost. In most cases, we do have to sell to these accounts at a lower profit margin — but, in the end, they provide a nice, consistent base of business to help cover our overhead costs."

It's getting easier all the time. Aside from the Internet, other tools are making the challenges of selling goods overseas less burdensome. Katz notes that a shipping calculator installed on his company's website last year allows international customers to check out with accurate shipping costs and delivery times already added to the order. Additionally, UPS now offers an online tool that gives an estimate of the import duty that a customer will be charged upon receipt of his or her shipment: "With these tools in place, filling export orders is not much more difficult than filling domestic orders."

Financial help is available. The 2010 Small Business Jobs Act promotes small-business exporting, including offering higher loan limits, expanding the Export Express Pilot Program (a funding program geared toward exporting) and funding the state trade and export promotion grant program.

Small businesses need no longer confine their vision to a particular city or neighborhood. Thanks to a variety of factors, those cities and neighborhoods can be half a world away — and still be as accessible and potentially profitable as the customer around the corner. Notes Katz: "In my mind, the question is why shouldn't small business be growing their businesses by exporting?"

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