This was originally posted in Expertexporter’s wordpress blog in February 2014
Contrary to the belief that mainly large organisations have the resources to manage the complexities of exporting, I would say size does not matter when it comes to exporting. Around one in four SMEs based in other areas of the EU is involved in exporting and if we look at the German market, it is actually the ‘Mittelstand’ of small to medium-sized companies that form the backbone of German export trade. The UK government has also recently identified SMEs as being the best placed to increase British exports, so it is official; you are never too small to export.
Exporting can in fact be a very positive experience for small and medium sized businesses. It provides an opportunity to expand your client base during recession or when your home market becomes saturated. You benefit from economies of scale and if you have done your market research thoroughly, then you should also enjoy increased turnover and profits. By selling to a number of countries, you spread your risk and are not reliant on one particular market. You might even discover a different and bigger market for your products overseas.
So why are more small companies not exporting already?
I would suggest one of the main reasons is fear. Fear of the unknown, fear of not getting paid for goods delivered, fear of goods getting damaged or lost in transit and fear of language and cultural barriers.
It’s true that international trade is complex and there is a lot to learn but there is a wide range of support available that those new to exporting can tap into. Preparation is key and the old adage of ‘fail to prepare, prepare to fail’ is certainly very relevant in exporting.
Non-payment for goods delivered is a risk that all exporters face regardless of size but steps can always be taken to reduce this by using payment methods which provide more guarantee of payment than, for example, cash on delivery.
Goods can get lost or damaged in transit even within the UK, so this is not a risk that is only faced by exporters. Reviewing packaging and working with a reputable freight company can reduce the risk of damage and loss and of course insurance is available for goods in transit.
Whilst many business people around the world do speak English, there will be occasions when the language barrier appears insurmountable. This may well be a barrier to trading but if the potential value of business justifies it, it could be worth your while to employ an interpreter.
I would always recommend finding out a bit about the culture of your clients in advance of meeting them so you don’t make any cultural gaffes. Websites and travel guides are excellent sources of cultural information and can provide tips about doing business in the country.
My advice to all small companies thinking of exporting is face your fears, prepare well and go for it. If you are not getting a bite of the export cherry, you can be sure that others are and your domestic market might well be their next target.