By opening up your country or product to the international markets, you are taking the next growth step with your company. This inherently has a number of benefits as well as a number of risks. For example, by opening yourself up to the international market, you have to now account for IP, exchange rates, legal issues, partnerships and services. You also have the issues of stocking and capital allocation. This indicates that expanding internationally isn’t a breeze, but instead should be treated as a serious undertaking with numerous moving parts to it and because expansion can be filled with hazards, many misconceptions and falsehoods are born from the difficulties. In this post i’ll go over some common myths and beliefs about international expansion and more specifically, exporting.
Many small business and medium size business owners tend to believe in the concrete myths that international expansion is going to be exclusively too costly or too difficult. When in reality, there are so many avenues to explore that require different levels of capital and skill. For starters, how small is too small to export. It’s a commonly held belief that only large, well established firms with big name recognition are the only candidates for international expansion. This is a misconception held by a lot of american individuals and business owners. In reality, much of the world’s exports from foreign countries comes from small to mid level size companies. These are the kind of companies that have less than 50 total employees and sales in the $1-$10 million range. On top of that micro sized companies, with less than 20 employees, are seeing a surge in international sales in the last few years.
Along with the size of a company, the total financial picture is also a good indicator of whether or not to start exporting. The common understanding is that international expansion is going to demand hiring more people, more costly marketing campaign and coordinating logistics in a different country. The biggest misconception here is, go big or go home. Again in reality, your commitment to exporting is going to somewhere on an infinite continuum of international expansion. As a company, you can commit large resources and hours upon hours of manpower, but this is only feasible if you are in a position do that. For others, the financial commitment doesn’t have to be equal to larger firms. For one, international expansion should be preceded by promotion and research.. These 2 things begin your base for international expansion and give you a jumping off point. As you continue to promote and do research, you gain more understanding and a stronger foothold. This might eventually lead to trade agreements or distribution contracts. These are intended to be little to no cost ways to begin your journey of exporting. These avenues should provide enough insight and shed enough light on what your next steps should be.
There is also always the lingering question about competition. What’s to say that your product doesn’t get drowned out by the competition in the first year of business? There are no such guarantees, but these also aren’t predetermined outcomes. The global marketplace is a massive and varied hub. The needs and interests will vary from city to city, let alone nation to nation. For this reason, you might even find that your product is doing better in a foreign market than it was doing in the home market. Price is an important factor, but it is not always the determining factor to a product’s success. Quality, customer service, PR and taste are just as crucial factors to determine whether or not your product is a good fit for a certain market.
The other major factors or fear of exporting comes from a fear of risk and over complication of the process. Doing business anywhere has inherent risks and those risks are usually insulated in some way. Same goes for the process of exporting. For starters, as a small to medium sized business, you have a plethora of grants and loan programs that are both privately and federally funded. Counseling, advocacy and research resources are all available on the www.export.gov website. Here you can find more specific information and do the required research before you begin your next step.