International Exports Grow for US SME

International Sales Will Continue to Grow Say SMEs

Revenue derived from exports will increase by more than 50% over the next five years, according to US small and medium companies.

U.S. small and middle market enterprises (SMEs) are feeling very optimistic about the international market according to the 2018 American Express Grow Global Survey.

They forecast that revenue derived from exports will increase by more than 50% over the next five years, up from only 18% who projected this level of increase in 2017.

The third annual survey of over 500 domestically-based companies selling outside of the U.S. found that nine out of ten (90%) see international markets as a major growth opportunity. Exporters expect short- and long-term increases: 75% predict that the percentage of their company’s total revenue from exported goods or services will increase over the next 12 months and 76% expect growth over the next five years.

While  SMEs who export are optimistic about international opportunities, more than two thirds (71%) said that changing global economics are a significant challenge. Exporters expressed caution due to uncertainty around trade agreements (39%) and U.S. trade policies (38%). Over the last 12 months, many exporters changed their exporting strategy due to trade agreements and policies (32%) as well as political instability (28%).

Despite their concerns around the global trade landscape, exporters are investing in their international operations. Respondents report that, on average, they invest 36% of their annual sales and marketing budget into entering and growing international markets.

“Exporting is often seen as a challenging path to growth, but our research finds that small and mid-sized companies that begin exporting generally see the strategy quickly become a substantial part of their business and provide secondary benefits in recruitment and domestic operations,” said Brendan Walsh, Executive Vice President in the Global Commercial Services division at American Express. “We continue to see optimism and success among U.S. exporters, and we encourage SMEs to consider international sales by doing their due diligence about the potential range of opportunities.”

Identifying International Market Opportunities

Changing global economics impact opportunities around the world. When asked which region offered the greatest opportunity over the next five years, a quarter (25%) of exporters said North America (Canada/Mexico), down from 34% in 2017 and 2016. Now North America is virtually tied with Asia (26%) and Europe (25%) as the top regions for international growth opportunities.

Areas that experienced increased optimism were the Middle East (10%, up from 5% in 2017) and Oceania (5%, up from 1% in 2017).

In new analysis this year, the surveyed exporters identified government contracts as an opportunity to explore global growth. Nearly a third (32%) of the respondents identified new international markets based on U.S. government contracting opportunities they qualify to fulfill, and 16% of respondents said they are currently doing business internationally because of a government contract.

Technology Helping to Scale Export

More than three quarters (78%) said exporting became a substantial part of their business within three years or less of selling globally, and a major reason is online technologies have helped companies find new international markets – especially receiving inbound requests through their website.

More than four in ten (45%) identified new international markets to target based on their company’s website traffic, and 30% said they are currently doing business in international markets because a customer found their product online. When exporters’ website traffic alerts them to a new market opportunity, the next steps they take include further researching the market (60%), exploring the market for partners (59%) and traveling to the market itself (55%).

Additionally, respondents are adjusting their exporting strategies due to emerging technology trends in the industry. Four in ten (43%) said technology that makes exporting easier to scale has changed their strategy in the last 12 months.

The technologies most likely to have a significant impact on their plans to sell internationally include fintech (36%), artificial intelligence (35%) and the internet of things (35%). Interestingly, the adoption of supply chain technology (e.g., machine learning, robotics, etc.) divides companies: 34% said that the adoption of this technology will lead their company to increase efforts in international trade, while 31% said it will lead them to be more cautious.

Global Lessons for Domestic Operations

As U.S. exporters remain optimistic on revenue growth through international business, companies also often experience positive impacts on their domestic operation as a result of exporting.

A strong majority of SME exporters 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 (83%) and make adjustments (when necessary) to the way they market to domestic customers (84%).

A significant amount of exporters report that selling internationally also impacts domestic hiring, in terms of attracting and retaining new talent (85%).

Along with positive impacts to domestic operations, eight in ten (80%) companies said that selling internationally opens up more flexible financing options. In addition, their exposure in international markets helped them become aware of new financing options (75%) and had a positive impact on their ability to obtain financing (79%).

Resources for SMEs to Get Started and Grow Global

While technological advances help companies find new global markets and make them more accessible, companies rely on additional resources to help them grow their international business. Small and mid-sized companies said they most often learn about international markets where they do business by networking (45%), seeking out resources in markets of interest such as employees and distributors (43%), joining trade and business associations (39%) and reviewing the online materials of potential trade partners and customers (38%).

Additionally, nearly one-third tap the resources of government agencies (30%) like the U.S. Department of Commerce’s Export Assistance Centers (USEACs) and the U.S. Small Business Administration (27%), as well as corporate training programs (31%), such as the American Express Grow Global which brings together global trade experts, exporting officials and business leaders to provide valuable resources for U.S small and middle market companies to sell internationally. The program includes free events and online resources that connect owners and decision makers with exporting officials and international buyers.

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