Optimism Reigns Among Small and Middle Market Companies Who Export

Optimism Reigns Among Small and Middle Market Companies Who Export

Optimism Reigns Among Small and Middle Market Companies Who Export

The FINANCIAL -- An overwhelming majority (92%) of U.S. small and middle market enterprises (SMEs) who do business globally see international markets as a significant growth opportunity, according to the 2017 American Express Grow Global Survey.

The annual survey of these exporters found that they generate 36% of their annual revenue, on average, from sales outside the U.S.

Seven in ten (73%) SME exporters anticipate a growth in sales from international customers over the next year. Over the next five years, almost eighty percent (77%) remain confident that revenue from sales outside of the U.S. will increase, and on average, they anticipate an increase of nearly thirty percent (29%) over this time period.

Many U.S. SME exporters look to their backyard for expansion. One-third (34%) believe North America (Mexico / Canada) has the greatest opportunity for their company’s growth over the next five years. Europe and Asia are runners up respectively, with around 25% viewing each of these markets as having the greatest opportunities for their company’s growth during this same time period.

“International trade is a clear growth opportunity for small and middle market companies,” said 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.”

How Companies are investing in International Markets

Looking into fiscal year 2018, almost half (42%) of respondents project their annual budget for activities related to selling their products/services outside of the U.S. will be $250,000 or more. On average, companies who sell globally invest 30% of their annual sales and marketing budgets to enter or grow their business in international regions.

Additionally, a significant amount of companies surveyed (80%) agree that selling to markets outside of the U.S. opens up more flexible financing options. As much as 80% also say they became aware of new financing options for international expansion once they began selling to markets outside of the U.S.

The Impact Global Growth Has on Domestic Operations

Selling to international buyers has provided lessons learned when doing business at home. 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 (85%) and make adjustments (when necessary) to the way they market to domestic customers (82%). A significant amount of these U.S. SME exporters agree that selling internationally also impacts domestic hiring, in terms of attracting and retaining new talent (87%) or inspiring them to recruit candidates with different backgrounds and capabilities (86%).

Challenges and Uncertainties Still Left to Overcome

Almost eight in ten exporters (78%) surveyed say that changing global economics is a significant challenge. As it pertains to Brexit, U.S. SME exporters are evenly split on whether it will cause them to increase efforts in pursuing international trade (29%), lead them to be more cautious about international trade (30%) or have little to no effect on plans for pursuing international trade (29%).

Many of the challenges of operating internationally still exist and in some cases have even increased since 2016. When asked about challenges related to selling goods or services in countries outside of the U.S., a large percentage of exporters noted the following as very or somewhat significant:

Compliance with local laws – 80% (up from 73% in 2016)
Building relationships with foreign partners – 79% (up from 75% in 2016)
Trade regulations and transportation costs – 78% each (up from 73% each in 2016)
Limited visibility into local competition – 71% (up from 63% in 2016)

Opportunity for Small & Mid-sized Enterprises

A majority of SMEs are missing out on the exporting opportunity, with only 1% of U.S. small businesses and 7% of U.S. middle market companies currently selling internationally1, as noted in a recent report from American Express and Dun & Bradstreet. According to Ed Marsh, exporting advisor to American Express, revenue growth could be the biggest benefit of selling internationally, but additional benefits may include:

Improved domestic operations
Talent recruitment and diversification
More financing options

Companies interested in expanding globally should 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.