Reaching New Markets: Small Firms are Exporting

Reaching New Markets: Small Firms are Exporting

The ability to capture revenue from foreign markets can be an incredibly healthy thing for small companies, and a recent development as made it a little easier to get started. Many small business owners, understandably preoccupied with their normal operations, would likely be surprised by how much opportunity lies abroad. Also, by the notion that it’s not beyond their reach.

 

Can We Export? Should We Export?

Any local business can become an international exporter, and the reasons they should come down to simple logic. Today’s marketplace is a global one. Somewhere around 96% of the world’s total potential customers are outside of the United States, according to the U.S. Department of Commerce, and around 70% of the world’s purchasing power. Smart business owners know that success depends on reaching these people.

The returns are significant too. A few years ago, data published by SCORE, a national nonprofit association that counsels small business owners, found that U.S. companies that export have faster rates of growth and are about 8.5% less likely to go out of business than non-exporting companies. Additionally, more than a quarter of the companies that trade internationally significantly outperform their typical markets.

Researchers also found that almost half of companies were able to become exporters in just a few weeks. Another quarter of them were exporting in just a few months.

For business owners that don’t believe that exporting is possible, they should know that a majority of U.S. exporters are in fact small companies. Nationally, about 98% of exporters are small and medium sized businesses and in Indiana it’s about 84%, according to data from the Office of the United States Trade Representative and the International Trade Administration.

Though they do make up the lion’s share of firms, the total export value from small companies is much less than the value exported by larger operations. The International Trade Administration says that small and medium-sized companies represent less than 30% of the known export value of U.S. exports. For Indiana, the total value generated by small and medium-sized firms is about 16%.

 

Help to Get Started

There are quite a few helpful resources available on several levels for companies that want to begin exporting, including a new option that can help finance the initial steps. Last autumn, the U.S. Small Business Administration (SBA) announced Indiana as the recipient of a $495,000 State Trade and Export Promotion (STEP) grant, which will support the state’s efforts to develop and expand export-related activities among small businesses and open up new markets for Hoosier-made goods around the world.

“As we work to remain competitive in today’s global economy, Indiana recognizes the need to cultivate mutually beneficial partnerships around the world and ensure our businesses and people are connected to international markets,” Governor Eric J. Holcomb said. “With the federal STEP grant, we’ll help Indiana-based small businesses grow and sell Hoosier-made goods across the globe.”

The STEP program is designed to increase the number of small businesses that export goods and to increase the value of exports from small businesses. Since its initial launch, the STEP program has awarded approximately $157 million in grants to U.S. small businesses.

Under the program, eligible small businesses may apply with the Indiana Economic Development Corporation (IEDC) for reimbursements of export-related activities like participating in international trade missions, foreign trade shows, and export educational programs, as well as other export services provided by the U.S. Department of Commerce. The IEDC will match the federal grant with $165,000, increasing the total funding available to Indiana small businesses to $660,000.

“Programs and funding created through the STEP award and SBA’s other export resources can open doors for small businesses to explore revenue streams they never dreamed existed abroad,” SBA Indiana District Director Stacey Poynter said.

Indiana’s STEP grant aims to help diversify Hoosier small businesses’ customer bases and support job creation. The program complements existing state efforts to assist companies with identifying, marketing, and selling their products or services around the world. The Export Indiana Fellowship, for example, is a three-month long program that helps small businesses create ready-to-execute export plans in order to drive growth and position their business in the international marketplace.

 

It’s Not Hard to Start

Beyond the STEP program, there are numerous other organizations that support for exporters in Indiana including industry groups, chambers of commerce, and other local/state resources. There are also an array of additional federal programs that can help small businesses become exporters too. Export.gov by the International Trade Administration has lots of different resources, videos, and information on how your company can get started in international trade.

Exporting is worth considering. New customers are out there waiting, tools are in place to help you, and most companies will be able to become exporters in just a few weeks to a few months. Not only will your company grow, but you’ll be bringing new revenue home to the Hoosier state.

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