Small Businesses Going Global

While the U.S. market is large enough for small businesses to expand, there are many benefits to going global. A strategic benefit to a small business is that it reduces its dependence on existing markets. Financially, it allows a company to increase sales and profits, and to minimize seasonality problems faced in certain markets. Expanding globally also gives small businesses access to capital, technology, talent, and markets that previously only big firms could reach. These resources are now available to anyone, anywhere, and at anytime.

The most common way that small businesses expand globally is through exporting. In fact, over 88 percent of U.S. exporters are small businesses that have fewer than 100 employees. It is no surprise that these owners are deciding to export after looking at the following statistics from the Small Business Exporters Association of the United States:

• The value of small company exports now reaches almost $200 billion a year
• Over 96 percent of the world’s consumers live outside the U.S.
• More than 12 million U.S. jobs are now directly supported by exports
• Exports accounted for nearly one-third of all U.S. economic growth from 1990-2000.

If you are planning to export, the following steps are key in deciding where, when, and how to export your products.

• Prepare to export. You must have a clear export strategy and make sure that all managers are on board. Understand your needs and goals and decide if you are ready for the additional challenges.
• Perform foreign market research and identify international markets where there may be a fit for your product.
• Find and develop trade contacts by identifying potential buyers, agents, distributors, or joint-venture partners for your product or service. There are various partner matching and trade services offered by the federal government.
• Promote your company and learn how to set prices. This can be a challenge due to different cultural, social, and legal practices.
• Understand the financing tools and government services available that will help in conducting business overseas. These will reduce your risk and alleviate uncertainty on how you are going to get paid.

Exporting can be very beneficial to a small company, but it doesn’t come without some risks. Companies conducting business overseas experience currency exposure and therefore, owners need to know how to protect their profits from unpredictable changes in foreign exchange rates. The local banks below have services that can help.

Local Bank Resources

• Charter One: Global Markets
• First Merit Bank: International Banking
• Huntington Bank: Export Services
• Key Bank: Financing International Trade
• National City: International Services

Local and State Resources

• Ohio’s International Trade Division: Services for Exporters
• COSE: Globalization; the Next Economy
• Crain’s Cleveland Business: Benefits of Trade Missions
• Crain’s Cleveland Business: Going Global? Take advantage of Ohio’s export financing options

National Resources

• Small Business Exporters Association
• SBA: Small Business Guide to Exporting
• Export.gov: Export Basics
• Entrepreneur.com: Increase Business with International Customers

Support for MoneyWatch is made possible by Charter One Foundation. Research assistance for MoneyWatch is from Cleveland State University Nance College of Business Administration