About 70 percent of the world’s purchasing power and 86 percent of projected economic growth over the next decade lie outside the United States. Considering that only a small fraction of U.S. businesses export their goods and services overseas, there is a great loss opportunity in potential customers and profits that most businesses, big and small, are losing out on. More and more, however, small businesses are starting to change this fact as they look to make the move abroad.
In total, small businesses account for about 30 percent of the total U.S. export volume. As debt-laden American consumers spend less, however, small-to-medium sized businesses are finding unexpected earning opportunities overseas. In fact, the Commerce Department and President Obama’s National Export Initiative aim to double U.S. exports in five years and, as part of that goal, are making a big push to help smaller companies increase exports.
The Commerce Department is helping to educate business owners about the prospect of increasing exports. Many small businesses are either not aware of the huge opportunities that overseas markets provide or do not know how to identify and sell to international customers. Business owners in many areas of the country can participate in Commerce Department workshops and seminars designed to increase their knowledge about doing business abroad—everything from overseas small business financial management to laws governing contracts.
There are certainly some unique challenges when it comes to doing business outside of the country. Though demand for American goods is high overseas, it’s important to recognize and embrace cultural differences. Small business owners should do a thorough cost-benefit analysis and plan their international budget carefully before committing any resources into international markets.
Financing has the potential to present a challenge, as most U.S. banks cannot finance assets and collateral overseas. This requires small businesses to have significant liquid assets of their own to make move abroad. In some cases, small firms can get a loan from the Small Business Administration to finance this expansion.
An overseas expansion can require a major commitment of time and energy, and of course, there are plenty of risks involved, but for those who succeed, the rewards can be substantial. In an increase from 2009, the Commerce Department attracted more than 13,000 foreign buyers to U.S. trade shows and helped 4675 small businesses do business with these overseas buyers in 2010.
The Commerce Department and the International Trade Administration can help with many of the hurdles that small firms face when going international. For small businesses looking to maximize both business and financial management output, the opportunity for overseas expansion is there.
