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The Role of Exports in Small Business Growth and Job Creation

Exporting is a huge opportunity for your business.  Small businesses across the nation are using exporting to increase their profits, so this would be a great benefit for your business, as well. Exporting is emerging as a new market to tap into for small business growth and job creation. It’s a great time to jump on board and integrate exporting and international clients into your customer base because small businesses are the major source of job creation in the country.

 

Exporting and Small Business
Most industries define small businesses by the number of employees or the amount of revenue earned. In most cases, a small business is one that has 1-500 employees. More start-ups are gaining speed and are more likely to grow than any other subset of businesses. With the emergence of the new market of exporting, there will be more opportunity for small businesses to sustain themselves. The opportunities are boundless due to the fact that 95 percent of world consumers live outside of U.S. borders. So it’s a safe assumption to think that targeting a portion – if not that entire group of international consumers – is a smart idea for any business. This is true if a business is product based or service related. A positive caveat to exporting is that a majority of companies that were in business during the recession were able to survive and stay afloat because they sold their goods and services overseas.

Entering into the exporting market does not have to be a difficult one. As a matter of fact, you can employ the same marketing strategies you use domestically. Because of innovation and particularly the use of the internet, offering services globally is an easy step to take. Companies have begun to create an international marketing plan. This is something that you can do for your business, and you can use existing marketing strategies that include content marketing, search engine optimization, and social media marketing to name a few.  This will allow your business to tap into this new market and reap the benefits.

 

The Benefits of Exporting for Small Businesses
Small business owners who are choosing to export are finding there is a huge need for their company’s products or services. This can be looked at as a win-win situation. The win for the business itself obviously is huge profits, and the win for the potential clients is new resources. Let’s take a look at some additional benefits that are brought to small businesses through exporting:

·         Increased growth

·         Huge profits

·         Additional markets

·         Long product service life cycles

·         More customers/clients

·         Tax Advantages

·         Improved Competiveness

 

Getting Started
How should you get started? Because of the popularity of this new market, there are many resources to help you get started, such as this guide from Entrepreneur. So let’s go through a few steps to think about.

The first step toward exporting should be to decide which countries you wish to export to. Some businesses have chosen to start exporting to one country while other businesses have chosen to export to several countries. Obviously with technology, this arena lacks boundaries. However, when it comes to shipping and other expenses for your business, you should conduct some research and strategize accordingly. Yes, it’s true as business owners we must research the cost of doing business as part of new initiatives. This is also the case with exporting.  With that in mind, a second step in the process should be to research funding assistance opportunities for exporting.

 

Funding
The federal government understands the impact that global trade and exporting has on the economy. With the Small Business Job Acts of 2010, the U.S. government has created several funding opportunities for businesses that participate in exporting. Previously, there were grants made available to states that assisted eligible small businesses with exporting. This program was called State Trade and Export Promotion Pilot Grant. According to a January 2014 report by the Small Business Administration titled “Small Business Administration Trade and Export Promotion Programs,” President Obama signed into law the Consolidated Appropriations Act, which provided $8 million for the STEP program in 2014. As part of the STEP program, the SBA provides three loan programs that specifically target exporters.

·         Export Express Loan program, which provides working capital and financing for businesses that desire to expand exporting.

·         Export Working Capital Loan program, which provides financing to support export orders from purchase order to final payment

·         International Trade Loan program, which provides long-term financing to support businesses that are expanding because of growing export sales.  It also supports businesses that need to update and modernize their systems to support exporting functions.

In addition, there are other SBA loans that support export-related activities. In 2013, the SBA export-related loans comprised of $1.2 billion in loans. To view all the grants available, visit the SBA website. So in addition to the markets and the opportunities that exist in exporting for small business, the funding is also there. So for those businesses that choose to take advantage of the opportunities that globalization offers, the federal government is making it possible through grant and loan opportunities.

Additionally, the government understands that when small business export, the U.S. economy is impacted in a positively.

 

Job Creation         
The U.S. is home to 28 million plus small businesses. As stated by many economists, small businesses are the major source of job creation in the U.S.  The SBA states that currently small businesses create two out of three jobs, accounting for 99.7 percent of U.S. employers.  So as small businesses look to increase their client base and move into globalization, the country will continue to see increased job growth.

According to the United States Department of Commerce in 2013, 11.3 million jobs were supported by exporting. Plus, additional data revealed by the Department of Commerce showed that for every $1 billion supported by exporting, 5,600 jobs were created. Those figures substantiate the argument that small businesses are fueling job growth, thus creating a stable economy.

Some industries that have benefited from small business include retail, government, leisure and hospitality, information technology, agriculture, finance, wholesale trade, and warehousing. It just makes common sense that as small businesses continue to expand and grow into new markets including exporting, then new opportunities will exist for employment.

 

Barriers
Data has shown that the benefits for small businesses to engage in exporting outweigh any negative perceptions. As with any new target or venture as a business owner, it is your responsibility to research all compliance issues and requirements.  There are some barriers that exist that can be knocked down. However, you should know what they are.  They include

·         Capacity to Export – This obviously will depend on your products and services. Does your business have the capability to engage in exporting?

·         Lack of Awareness – This is a barrier but can also be an opportunity for your business marketing.

·         Perceived Overseas Demand – Initially a barrier, perceived overseas demand can be the lack of demand for your product or service.

·         Bureaucracy and Compliance Issues – Exporting comes with governmental regulations. Be sure to research all the compliance issues for trading into a new country.

 

It Makes Sense
Business decisions often come down to common sense decisions. For any business, it makes sense to move into new markets and new targets if you can handle the growth to expand your customer base. This is also true with globalizing your company. And with the majority of the world’s customers outside of the U.S., it makes sense that you have to meet your customers where they are. It is a smart move for a small business to reap the profitability benefits that exporting will bring to the company.

By: Chantal Towles, President of Creative Business Assistants, LLC, provides dynamic, customer-focused, small business incorporation services, as well as compliance and virtual business support services.  To learn more about Creative Business Assistants visit www.cbadirect.com or view Chantal’s profile on LinkedIn.

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Kabbage Team

The Kabbage Team is here to not only fund the small business loans you need, but to help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at content@kabbage.com.

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