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Small Business Digest


  
    February 2017
 
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Small Businesses Can Have Global Sales Reach

Thanks to the Internet, the average sales footprint for U.S. small businesses has doubled in the past four years to 75 miles.

One driver for this expansion is the growth of overseas sales by smaller companies.

At the same time, fewer than 1% of the nation’s 26 million small businesses are even involved in exporting – a number that’s drastically lower than in other developed nations.

However, studies show that American companies are increasingly expanding across borders in search of growth and new opportunities.

“The ability to go abroad is not limited to large corporations, but can be done by small businesses if they follow and/or use smart marketing tactics,” says Ross Miller, InterGrow Group founder and director.

“For instance, smaller enterprises can often move their offerings abroad through resellers who are servicing a particular sector and who like to have products or services that [they] can provide and bill on one invoice,” he added.

“Smaller enterprises usually have niche products or services which can be in demand in other countries, used to fill a reseller’s product portfolio.”

InterGrow Group offers several reasons for this trend:

  • Domestic markets are well-penetrated: share and revenue growth are static.
  • Foreign markets are growing, developing and showing attractive potential.
  • Competitors are investing in new international opportunities.
  • Customers are expanding globally and expecting their domestic partners to follow.
  • Foreign partners offer attractive capabilities, technologies and market access.

Many smaller firms are reluctant to test these markets for a variety of reasons. 

InterGrow Group points out eight options for going global. Each path has advantages and disadvantages.

  1. Sell directly to foreign clients from the company’s home offices.
  2. Open a local office to represent the business.
  3. Use a contract manufacturer.
  4. Hire a sales agent to sell to foreign markets.
  5. Find a foreign distributor.
  6. Develop a franchise overseas.
  7. Enter into a joint venture.
  8. Build a greenfield operation.

The potential for growth is as vast as the world itself. If businesses pick the right partners, they can plant seeds today for a fruitful, international business tomorrow. However, with stagnating U.S. markets, the sense of urgency should be immediate.

In all cases when going global, small-business leaders must develop an international mindset.
They need to open their minds to:

  1. Curiosity
  2. Flexibility
  3. Change
  4. Different logic and thought processes
  5. Different ways of executing projects
  6. Weighing and evaluating personal opinions long enough to see “reality” from another culture’s perspective. Often this is the most difficult task of all.

Where to focus their overseas marketing efforts and how may seem simple, but is actually quite complex. The key determinators are as follows:

  1. How much productive capacity is available?
  2. What human infrastructure/experience is at the company’s disposal for foreign growth?
  3. Do the company’s products “travel” easily?
  4. Are the products already in any foreign markets, and if so in what manner?
  5. What budgetary commitment is the company willing to make in this endeavor?
  6. How competitive are the products factoring in the cost of shipping and other expenses?

Some basic rules do apply, however:

  1. “Don't bite off more than you can chew.” Before charging off to take on the China market, ask whether the company knows enough about the market, and whether it has the means monetarily and in human infrastructure to play in that arena. Rather grow in stages and start closer to home with export markets such as the Caribbean, Mexico, Central America or Canada.
  2. “Start simple,” and try an export market. Leave greenfield investments and especially joint ventures for when the company’s expertise levels and familiarity with international trade reach a higher plateau. 
  3. Don’t “experiment” with international markets. If the company doesn’t have the expertise in-house, find it outside and bring it inside, either full time or part time. People with language and cultural expertise can be extremely helpful.
  4. The way to grow internationally should be determined by the company’s degree of experience to date, and the budgetary flexibility that the company has at its disposal. If the company already has a vibrant export business, it should explore other options for “closed” high-tariff markets such as Brazil or India. In a case such as this, consider a “localized” structure of a joint venture or a “wholly owned” greenfield investment.

The InterGrow Group LLC:  can be reached at www.intergrowgroup.com.


© 2017, Information Strategies, Inc.
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