Making the decision to expand a small business can be a difficult decision for any business owner. Competition amongst small businesses within the United States can prove to be debilitating for many businesses due to various factors at any given time. The United States holds less than 5% of the entire world population; therefore, 96% of consumers live outside of the United States. At a recent international trade symposium held in Washington D. C. , the Small Business Administration emphasized that today’s global markets present both challenges and opportunities. In the global economy of the 21st century, our competition is not just the firm down the road.
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Our competition comes from anyone in any corner of the globe with a good idea, a good education and a good internet connection,” explained SBA acting administrator Sandy Baruah. To most, the thought of expanding a small business globally seems impossible, but there are many resources available to business owners that provide support, research tools, and an abundance of information to help determine if global expansion is an attainable goal.
Exporting is the most commonly used global market strategy utilized by small businesses employing less than 100 employees. In fact, these small businesses make up about 60% of the firms in the United States exporting products to other countries. As with major business decision, global expansion has advantages and disadvantages. Some advantages include: increased sales and profits, gain in foreign market share, reduced dependency on existing markets, and stabilization of seasonal market fluctuations.
There are also disadvantages involved which include: hiring more staff, higher administrative costs, obtaining additional financing, learning and implementing new procedures, policies, and regulations, and obtaining special licensing. The advantages and disadvantages should be assessed carefully when making strategic marketing decisions, as these decisions will affect the future of a business. For a small business wanting to export their product(s) into another country for the first time, an English speaking country such as Britain, Ireland, Australia, or New Zealand would be ideal for obvious reasons.
Expansion into one or more of these countries would eliminate
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the language barrier and make the transition much easier and, possibly, help keep initial costs down somewhat. Identifying the target market is very important in determining where demand for the product will be greatest. There are various ways that market research can be conducted. Fortunately, most of the needed information can be easily accessed by computer via the internet. Export. ov is a site specifically designed for businesses looking to expand and export their product(s) globally.
The website offers many valuable tools to assist with research and to obtain relevant statistics and data. Additionally, the website provides access to the “Market Research Library” containing more than 100,000 industry and country specific market reports, authored by specialists working in overseas posts. This type data is extremely beneficial when trying to determine which countries have the best markets for the product(s) being offered.
When attempting to identify the target market, it is always a good idea to target at least three different markets and perform analytical reports on factors such as pricing, local competition, possible product barriers, economic stability/growth, cultural behaviors, regulations, and the costs of doing business in a particular geographic area. Each business should shape their research to their own specific needs, product(s), and objectives. Another option for businesses doing market research is to utilize the services of a marketing representative in the countries they are researching.
This type of research involves the gathering of information from potential buyers by way of interviews, surveys, or other direct contact. This type of research often proves to be very time consuming and costly. The most challenging part of conducting marketing research knows what to do with the information after it has all been gathered. The findings must be organized and translated into useful information that can be evaluated, categorized, and interpreted for the purpose it was gathered.
Usually, this process involves the use of internal marketing professions who compile information into software programs that store and sort the information into useful charts, graphs, or reports. Once the information is sorted into useful information, comparisons, findings, and other statistical information should be analyzed to determine where the product(s) will be marketed. Expanding globally is a great opportunity for American business owners to increase profits and growth within their company.
Going global offers businesses the opportunity to experience the benefits of reducing dependency on a single market, while gaining market share in a foreign market. At this time, only about 10% of American business owner’s are involved in exporting their products to other countries. Although there are great opportunities in global expansion, careful consideration must be given before committing to an expansion of this magnitude. Expanding into a foreign country can be difficult because of cultural diversities and practices, regulation, consumer behavior, economic stability, and many other reasons.
In order to properly evaluate the markets in other countries an in depth marketing research plan must be conducted so any business strategies being considered can be properly assessed. While integrating your product into other countries can be very complex, it is an attainable goal that could prove to be a successful move for a growing business.See More on Marketing