Small businesses have the perception that only large businesses with a research and marketing team and huge capital can export products and services. However, this perception can be limiting and hurt small business owners who can grow exponentially by trading across borders. Small businesses need to realize the importance of taking calculated risks to scale and sell in international markets for huge returns.
It is important to know that a significant percentage of exporters are small businesses. Many exporters have fewer than 20 employees and still have a strong global presence in their industry, selling high-quality products at competitive prices.
While risks are involved in any business, it is unfortunate that many small business owners don’t recognize the potential benefits of expanding business overseas.
If you’re a small business looking to expand to international markets, you should definitely do your research and know the benefits of selling to a wider audience.
Here are 5 benefits of exporting for small businesses:
1. More Sales and Profit
The obvious outcome of expanding your market is increased sales of your product or service. If you’re focused on high quality and consistently deliver above customer expectations, your sales and profits will improve.
Small companies can quickly scale, add more employees, generate more working capital, and expand operations by constantly innovating and meeting customer needs.
If your product or service has been successful and recognized for quality in the domestic market, you’ll have a higher chance of success in international markets. By selling to a wider audience, you’ll drive more sales and profits for your business.
2. Reduce Risk and Reliance on Domestic Market
As a small business owner, you have to manage risk. There is nothing better than having multiple streams of revenue to spread out the risk. Expansion to international markets will allow you to gain a new customer base and diversify your income.
The chances of your business being highly affected when one market experiences negative conditions such as economic downturns become significantly lower.
When you reduce the reliance on the domestic market, you allow your business to grow and capitalize on opportunities presented by global markets. An example of this benefit has been seen during COVID-19-induced lockdowns.
While some countries remained slightly affected, others faced massive economic implications. If you had relied on only one market and the economic conditions turned unfavorable, your business would’ve been in serious trouble.
3. Gain Knowledge and Useful Information
When you enter international markets, the market conditions are different and you have to adapt to meet customers’ needs.
Business strategies can change and you’ll gain a lot of experience that can improve your domestic and international businesses.
Trading overseas benefits small business owners who can implement the new lessons to improve customer experience.
Useful information on new technologies, products, and marketing ideas can transform the trajectory of small businesses looking to deliver better products and services. New innovation will allow them to strongly compete with competitors to add more value to customers.
4. Lower Production Costs
With the increase in sales to meet the demands of a wider customer base, the cost of production will decrease. If you’re a manufacturer, your cost to manufacture one unit of your product will reduce. The economies of scale result in lower product costs and more profits for small businesses exporting to international markets.
5. Extend Product Lifecycle
The standard product lifecycle of launch, growth, maturity, and decline will be extended when you serve global markets.
You can extend the lifetime of products by extending the lifecycle. By launching products in global markets that are still in maturity in the domestic market, you can extend the lifetime.
Global sales can finance product development to replace the product in the domestic market with a better one. The entire product cycle can become self-sufficient and reduce the strain to constantly look for ways to finance product development.