Today, it’s more practical than ever to sell goods and services across the globe. Most of the world’s potential consumers are outside of the United States, and the global affinity for Made in USA products and services is second to none. Many exporters continue to boost their bottom line and build their competitiveness by selling to world markets, and you can too. U.S. small and medium-sized companies—firms with fewer than 500 employees —account for 98 percent of the nearly 280,000 exporting businesses. The internet, improved logistics options, and array of federal, state, and local export assistance has made exporting more viable for even the smallest businesses. In 2019, the value of U.S. goods and services exports was an impressive $2.5 trillion. And as thousands of exporters can attest, diversifying your customer base through exporting can help to weather changes in the domestic and global economies.
If you are looking to export you may have asked yourself, "Is it worth all the effort?" Exporting can be one of the best ways to expand your business:
- Grow your bottom line (companies that export are 17 percent more profitable than those that don’t).
- Smooth your business cycles, including seasonal differences.
- Use production capabilities fully.
- Defend your domestic market.
- Increase your competitiveness in all markets.
- Increase the value of your intellectual property should you choose to license it.
- Increase the value of your business should you choose to sell it.
As the volume of trade grows and barriers to trade fall, competition in a company’s domestic market intensifies, particularly from foreign competitors. Competition in our own backyard and enter new markets for our products and services overseas:
- Ninety-five percent of the world’s consumers live outside the United States. That’s a lot of potential customers to ignore.
- Foreign competition is increasing domestically. To be truly competitive, companies must consider opening markets abroad.
- Exporting is profitable.
- Exporting helps businesses learn how to compete more successfully.
With significant projected growth in global trade, fueled in large part by newly affluent consumers in China, India, and other developing economies, the challenge for businesses of all sizes in the United States is how to dip into this incredible revenue torrent.
As global trade grows, companies that engage in it report a shift in income derived from their export sales compared with sales in their domestic markets. A study of U.S. exporters found that 60 percent of small companies in the survey derived 20 percent of annual earnings from exports, while 44 percent of medium-sized companies did. When asked whether export sales would grow at least 5 percent per year for the next 3 years, 77 percent of the small companies and 83 percent of the medium-sized companies said they would.
You might reasonably respond by saying, “That’s all well and good, but do I have what a person in another country will buy?” Companies that produce an amazing array of products and services have grown their businesses through exports. Some of what’s sold is unique, but most is not, relying on other factors such as superior customer service or marketing to close the deal. The businesses and people behind them are excellent at business fundamentals and passionate about expanding globally.
Companies that do not manufacture products can profit from exporting by providing wholesale and distribution services.
Another answer to “Why bother to export?” is that exporting adds to the knowledge and skills of everyone in a company. Doing business in a market that’s beyond one’s borders can transform its practitioners. The experience of forming new relationships, getting up close and personal with another culture, figuring out how to meet the needs of others, and learning how to address new business challenges is personally rewarding. It also leads to improvements in products and services and makes companies stronger in whichever markets they compete.
Source: International Trade Administration