(2 min read)
If there’s one thing that the associates at E.M. Wasylik are convicted of, it’s that the available market opportunity is much greater than what appears directly in the foreground. With 95% of all consumers residing outside of the U.S., the opportunity is enormous. This is particularly true for SMEs, which comprise 98% of all exporting businesses in the United States. Despite all this, only about 280,000 U.S. businesses choose to export. This article will review strategic reasons for exporting goods & services, namely revenue stream diversification and market expansion.
Diversifying Revenue Stream
In every area of life—from business to investment portfolios, from education to even the food we eat—diversification of input is essential to the health of the system. Navigating unpredictable challenges as diverse as these inputs requires such tools to be successful. In the case of the former, internationalizing goods & services smooths the business cycle by providing a path to more stable and predictable revenue, thus reducing the volatility that comes with reliance on a single market. This is particularly true when the home market is experiencing economic downturn. Companies with sales in foreign markets are often more resilient. Growth in the new market may go so far as to offset the downturn, or at minimum provide stable returns.
Expanding the Market
The next reason, nearly synonymous with going international, is market expansion. Entering a foreign market brings along numerous benefits, including access to a huge, new customers base which increase the bottom line. The new market might also offer the opportunity to promote portions of the product line which enjoy lesser success in the United States, or, to transform consumer understanding of the brand. For instance, in the United States, Carhartt, although it somewhat toes the line of mainstream fashion, is still primarily geared towards workers in the trades or agriculture. In Austria, however, this brand is heavily marketed towards more hipster types, particularly surfers and skateboarders, resulting in a wider customer base. Finally, a new market, by nature, allows for greater growth potential than a previously established one, which is particularly impactful when beating the competitor to entering.
What Does the Data Say?
In a study by the International Trade Association, 60% of small exporters shared that 20% of total annual earnings were derived from exports, while 44% of medium-sized enterprises experienced the same level of return. The U.S. Department of Commerce discovered exporting companies to be 17% more profitable than their non-exporting counterparts, while the Institute for International Economics found exporting companies to grow faster and to be 8.5% less likely to go out of business.
To repeat a previously listed statistic: only 280,000 companies in the United States export. This meager count is largely due to fear—fear of the unknown, of uncertainty, or where to begin. Regarding these worries of barriers to entry, EMW’s Managing Director, Ken Wasylik, says, “You’re not doing this as an island, this has been done over, and over, again.” Numerous organizations, including E.M. Wasylik, the U.S. Commercial Service, Small Business Development Centers, etc. have the resources required for a successful market entry.
Click here to view Ken Wasylik discuss these points on an interview with the Global Marketing Show!
