Ever considered going global? Today’s manufacturers may find themselves questioning if they should start to sell to international markets, and deciding to make that leap can be intimidating. Don’t let a few concerns deter you from exploring international sales as a business growth strategy. Consider that as many as 95 percent of the world’s buyers are outside the U.S., representing 70 percent of the world’s buying power. Yet less than 1 percent of U.S. small businesses and 7 percent of middle market companies sell internationally. That leaves a huge global opportunity, and there are three major reasons to consider selling internationally:
- The internet makes attracting international buyers easier than ever
- The outlook for global sales is strong
- Robust resources are available to help overcome the challenges
For these three reasons and more, the hard work required to take a business global is often well worth it.
Discover New Markets Online
Making your first international sale is often the hardest part, but it’s much more feasible now than in past decades. Even just ten years ago companies couldn’t easily estimate demand for their product in foreign markets and hesitated to commit the resources required to be successful. But in the last 7 years, the percentage of middle market exporters has actually quadrupled because companies are recognizing the global sales opportunity and overcoming the barriers to getting started.
Today, there is less speculation involved thanks to the internet. Many companies can decide on what new global markets to pursue based on their own hard data including website traffic and online inquiries from international buyers who find them through their website or other online platforms. In fact, in the recent 2018 American Express Grow Global Survey of over 500 small and mid-sized companies that sell internationally, 31 percent of those selling products began exporting after a buyer learned of their product online. Further, nearly half (47 percent) of products exporters continue to use data from their website to identify target international markets.
The Global Sales Outlook
In addition to being found online, product exporting companies said they started their international business journey for a variety of other reasons, ranging from the proactive pursuit of more sales (47 percent,) fulfilling a U.S. government contract in foreign markets (18 percent,) and even “accidentally” by responding to unsolicited online inquiries (15 percent). Once they took the leap and began selling internationally, many found that they can expand into new markets profitably and rapidly. Among companies that sell products outside the U.S., 77 percent said international sales became a substantial part of their business in three years or less and more than half (57 percent) are selling in at least six global markets.
Notably, the survey also found that product exporters are optimistic about their global sales opportunity. Fully 92 percent feel that international markets offer a significant growth opportunity for their company. When asked about their future expectations, 80 percent expect the percent of their revenue from global sales will increase over the next year, and 79 percent expect their exporting revenues will increase over the next five years.
That confidence is also reflected in companies’ investments. Nearly two-thirds (63 percent) of products exporters reported that they invest at least a quarter of their annual sales and marketing budget in entering and growing international markets.
Overcome Global Trade Challenges
While selling globally can help companies overcome certain challenges like hiring and retaining hard to find workers, there are real and perceived obstacles. Common challenges cited by companies that sell products internationally include:
- Changing global economics (74 percent)
- Legal & regulatory (compliance with international and local market laws, 80 percent; and trade regulations, 79 percent)
- Payments (exchange rate volatility, 71 percent; and delays in payment, 68 percent)
- Culture (building relationships with foreign partners, 76 percent; cultural differences, 70 percent; and language barriers, 65 percent)
These are all important issues to consider and manage when getting started, but there are many resources to help you understand how to overcome each of these—sometimes to even use them to your advantage. Products exporters reported turning to a variety of sources for advice on managing these challenges. They rely on networking (45 percent), local advisors (42 percent), and U.S. federal, state and local export assistance programs and events (31 percent) to obtain the knowledge they need for their international business.
Companies intent on overcoming these challenges can find support and educational opportunities from a variety of public and private sources. Attending global trade events provides forums to connect with experts and mentors. Examples include events like Discover Global Markets, the U.S. Department of Commerce’s flagship event series for U.S. exporters, and the American Express Summit for Success series, which includes panels and experts on international selling called Grow Global. Panelists at events like these often share their inspiring stories of overcoming international sales barriers all in an effort to help companies on their global growth journey.
Rewarding Hard Work
In total: running a manufacturing business is hard work and sometimes it’s difficult to determine the value of expanding into new markets at first look. Too often misperceptions of risk keep companies from actively exploring selling to new international markets. Many times simply responding to inquiries from international buyers can be enough to get started, and once the global sales begin, companies tend to expand and grow quickly.
Certainly there are challenges, as in every aspect of business, but there are resources available to help—and the payoffs can make international sales a worthwhile endeavor.
Ed Marsh is the Exporting Advisor to American Express.