Small business success is often rooted in how an enterprise performs in its local market. Small businesses thrive on repeat business from loyal, local customers and become a community institution, both economically and socially. However, a recent study suggests smaller organizations may benefit from lifting their international blinders and considering cross-border expansion.
In a global poll by DHL Express and IHS Global Insight, 26 percent of small and medium-sized enterprises (SMEs) that traded internationally were found to significantly outperform their market. But just 13 percent of businesses who traded only within their domestic borders outperformed the market.
International success has even spurred the majority of multinational SMEs that outperformed their markets to reinvest in their global offerings and increase exports in the face of economic uncertainty across the world.
“The strong correlation between improved business performance and cross-border trade suggests that there is a clear benefit for SMEs in going global,” said Ken Allen, CEO of DHL Express.
The report noted SMEs that began operations in the last five years were actually more likely to trade internationally than more established organizations, which had the luxury of having more time to grow the business.
However, one constraint to international expansion identified by the report was infrastructure. The report found SMEs struggled to get information on foreign markets, build up an overseas consumer base, and deal with high customs duties more than those with greater resources would.
Survey results indicated U.S. small businesses, in particular, are poised to reap the benefits of international trade because of favorable business conditions and more innovation.
“Perhaps most significantly, competing internationally forces [SMEs] to sharpen their own internal operations and processes, which benefits their business in their home market as well as abroad,” Allen said.
Small business owners who want to investigate overseas expansions to boost both their domestic and international profile, but don’t have the means to do so, can work with National Funding on procuring a working capital loan to keep pace with the competition.