Today’s technology creates enormous opportunities for small and midsize companies to thrive in international markets. Being flexible, creative and innovative, small businesses make decisions quickly and lack the layers of bureaucracy found in larger companies. The playing field in the international arena is level for small businesses to achieve growth and sharpen owners and managers’ competitive spirit.
Some of the incentives for going global are:
- Building sales and profits
When a company faces depressed sales in the local market, international markets can pick up the slack and achieve revenue stability. Exports can help companies build revenue during an off-season. For example, U.S. makers of summer goods may do well in Australia during its summer period, which coincides with our winter.
- Economic reasons
The U.S. Department of Commerce estimates that 95 percent of the world’s population lives outside the U.S. and that two-thirds of world’s purchasing power lies overseas. If a small business is serious about competition and growth, it can’t afford to rule out the international marketplace: The longer you’re out of world markets, the more opportunities you lose and the more opportunities you give to your local and foreign competitors.
- Economies of scale
When exports build demand, a business can spread the fixed costs over a larger base of production, helping it to reduce unit costs and increase profits.
- Technological advantage
If a firm has exhausted the distinct technological advantage of its product in the local market, that product is a prime candidate for exports in countries that can’t afford high-priced items or don’t need technologically advanced products.
For many small companies, the important question is not whether to go global but how to do it; that is, how to survive and prosper outside the narrow confines of a deceptively comfortable and familiar domestic market.
Ayse Oge, Ultimate Trade