Are You Overlooking Potential Customers? (Heather Robinette Expert Advice)

Arkansas exports range from rice to rubber bands, but the state ranks only 36th out of 50 in the dollar volume of exports, according to GlobalEDGE, a business research website.

Untapped international markets represent a viable opportunity for expansion and diversification for many Arkansas companies, including small ones. However, the narrow view of too many business owners is that exporting is an option only for larger companies or manufacturers. Three common concerns and misgivings about exporting I hear from business owners include:

• “I’m not a manufacturing business.” Services can be exported as well as products. In fact, according to the National Export Initiative Fact Sheet, “The U.S. is the largest exporter of private commercial services in the world.”

• “My business is too small.” Companies don’t need to reach a certain size before they can consider exporting. Of the Arkansas businesses that exported in 2013, 79 percent were small and medium-sized firms, according to the International Trade Administration.

• “What if I don’t get paid?” A variety of payment methods as well as trade insurance can protect both the buyer and the seller in international transactions. With sound practices in place, companies can mitigate much of the risk. In fact, some domestic customers may present a bigger risk of nonpayment.

Not surprisingly, the top two export markets for Arkansas goods and services are Canada and Mexico, but there is a whole world out there representing significant market potential for Arkansas firms.

While not a fit for every company, exporting offers seasonal balance, market diversification and access to higher-growth markets.

Remember that the winter months in the U.S. are the summer season in places like Chile, Australia and South Africa. During off-season periods, a seasonal business can offset slow periods by exporting to markets in the Southern Hemisphere, minimizing staffing changes and stabilizing cash flow.

Economies fluctuate, evidenced by the U.S. businesses still recovering from the Great Recession. While the world’s economies are connected, a business that sells to markets outside the United States insulates itself against downturns in the American economy.

When the domestic market for a product or service stagnates or simply matures, the same product or service may be in high demand in markets in other parts of the world. Companies that have a well-established domestic market may choose exporting as a next step in their growth strategy.

Going global is not as hard as you may think.

Exporting falls into two different categories, direct and indirect. Indirect exporting allows companies to engage in foreign trade through intermediaries or specific agreements that minimize the resources and risk for the business — an attractive option for smaller companies.

A number of businesses engage in international trade on a small scale through e-commerce. For example, a small company that ships a product sold on Etsy to the UK is engaging in exporting. What may begin as occasional online sales to someone in another country may point to broader international opportunities.

Exporting success stories are found across Arkansas. Increased exporting can fuel economic and job growth in our state. Since more than 90 percent of the world’s consumers live outside the U.S., companies looking for potential customers shouldn’t overlook international markets.

Maria Contreras-Sweet, head of the U.S. Small Business Administration, has said that exports are a central part of America’s economic growth, with export-supported jobs paying 15-18 percent more. Yet fewer than 1 percent of small businesses export, and of those that do, 58 percent of them export to only one country. Unlocking trade opportunities for small businesses is key to continued growth and expansion.

Before exporting, ample due diligence and market research are necessary to evaluate export potential.

Arkansas companies looking to export can get free assistance from several sources, including the U.S. Commercial Service Export Assistance Center and the Arkansas Small Business & Technology Development Center. For example, ASBTDC’s customizable Export Snapshot can show a small business’s potential international market opportunities.

Heather Robinette is consulting and market research manager at the Arkansas Small Business & Technology Development Center at the University of Arkansas at Little Rock’s College of Business.