Small, Mid-Sized Firms Anticipate More Global Trade
Small and medium-sized businesses that do business globally have a generally positive outlook on the international markets as a growth opportunity. In its 2017 Grow Global Survey, American Express found that 92 percent of these small and medium enterprises (SMEs) are upbeat about the opportunities in foreign markets.
The annual survey of SME exporters found that they generate 36 percent of their annual revenue, on average, from sales outside the U.S. Furthermore, 73 percent of SME exporters anticipate growth in sales from international customers over the next year. Looking ahead over the next five years, 77 percent remain confident that revenue from sales outside of the U.S. will increase, and on average, they anticipate an increase of 29 percent over this time period.
As for where they are looking for this expansion, 34 percent of the U.S. SME’s surveyed believe Mexico and Canada offer the greatest opportunities for growth over the next five years Twenty-five percent of respondents claimed that Europe and Asia would have the best opportunities for growth.
“International trade is a clear growth opportunity for small and middle market companies,” says Brendan Walsh, executive vice president, American Express Global Commercial Payments. “Revenues from exporting are strong and estimates for future growth are optimistic, which reflect enthusiasm for global expansion among many SMEs.”
The survey also found that selling to international buyers has provided lessons applicable to doing business at home. SME exporters in the study agree that selling to countries outside of the U.S. has led their company to implement changes to the products or services that they offer (85 percent) and to make adjustments—when necessary—to the way they market to domestic customers (82 percent). They also agree that selling internationally affects domestic hiring, in terms of attracting and retaining new talent (87 percent) or inspiring them to recruit candidates with different backgrounds and capabilities (86 percent).
As for challenges and uncertainties, the survey found that 78 percent of respondents say that changing global economics is a significant challenge. Concerns about challenges related to selling goods or services in countries outside of the U.S. have increased in many areas since the previous survey in 2017. This year, issues respondents noted as very or somewhat significant include compliance with local laws, 80 percent, up from 73 percent in 2016; building relationships with foreign partners, 79 percent, up from 75 percent in 2016; trade regulations and transportation costs, 78 percent each, up from 73 percent each in 2016; and limited visibility into local competition, 71 percent, up from 63 percent in 2016.
Despite exporters’ overall positive outlook, most SMEs are missing out on the opportunity. American Express has found that only one percent of U.S. small businesses and seven percent of U.S. middle market companies are currently selling internationally. It recommends companies interested in expanding globally consult with the U.S. Department of Commerce’s Export Assistance Centers (USEACs), the U.S. Small Business Administration (SBA) and other state and local agencies to find free or low-cost resources.