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Benefits Of Exporting For A Small Business

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Benefits Of Exporting For A Small Business

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People have the perception that a small business does not export. A business that is going international is usually assumed to be a large company, and with this perception in mind a lot of small business owners shy away from trading internationally.

NAZ DAUD

Somehow, people have the perception that a small business does not export. A business that is going international is usually assumed to be a large company, and with this perception in mind a lot of small business owners shy away from trading internationally. It is the problem of scale that frightens them, but is this indeed true?

They likely think this way because of the huge capital outlay that is needed to get into exporting, but in reality, a significant percentage of exporters are small businesses. Take note that the size of the company is not always important. It also does not need to have a huge marketing department just because it is going international. This is particularly true when the company sells in only smaller quantities or sells occasionally. The success of a small business in the exporting industry is dependent on the quality, competitive pricing and continuous availability of products. Despite the risks involved, which are actually part and parcel of any business, exporting brings a number of benefits to small businesses.

One of the benefits of trading internationally is the potential increase of sales and profits that international trade brings, although this is significantly influenced by the quality and success of your product. With an expanded market, sales of products will definitely increase if consumers discover how much they need or desire these products and if the company continuously supplies and retains good quality products, innovates and invests in product development when needed.

A small business can also gain market share globally through exporting. Obviously, when a company starts doing international trading, it becomes part of the global market. It will have a good opportunity to expand its customer base, and this will bring about better potential for long term growth.

Most small businesses start with the domestic market first before going into exporting. By achieving domestic success they will attain the background knowledge needed to break into foreign markets. Without a good level of success in their home markets, companies will be unlikely to achieve success abroad. If you can't make it at home then work on that before expanding your borders.

In working to achieve this level of domestic success, your business will likely become a prominent competitor in your home market, and this competitiveness will help you to be successful in the wider world markets that you will face when exporting.

Another possible advantage of tapping the international market is the lower cost of production. With the increase of supplies needed for a wider target market, the cost of production per unit of product should decrease.

The next significant foreign trade benefit for small businesses is the potential gain of knowledge. By entering the international market, a company can gain various experiences which can be used to improve both its domestic and foreign businesses. It can gain information on new technologies, new product and marketing ideas, and much more. Such knowledge can be used to develop better products and sell them more effectively.

Diversifying risks is one more advantage of exporting. With the company's expansion to other countries, risks such as economic downfall and market changes are more evenly distributed. While domestic companies may be wholly affected when misfortune hits the domestic market, a company with foreign interests will not suffer such great losses.

A small business can also benefit from selling its excess products internationally. If the company exports its goods, it does not have to give huge discounts to its domestic market or throw away excess products. Excess products can be sold to other markets that are not so important to the long term future.

And lastly, exporting can lengthen the life of a product. A typical product has a life cycle of launch - growth - maturity - decline. An exporting business is able to extend these stages and significantly extend the lifetime of its products by launching it to export markets while the domestic market is still in maturity. Product development to replace that product in the home market can then be financed by export sales and hey presto! Your entire product cycle becomes self-sufficient and one financial strain on your business has been eradicated.

With these benefits that come with exporting, owners of small businesses should consider tapping the international market. The size of the business is irrelevant: what matters is the will to succeed in the export markets. All it needs is high quality and useful products, and a good entrepreneur who is a risk taker in order to succeed.

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