The Small Business Exporters Association (SBEA) has recently released their 2016 Small Business Exporting Survey. The survey, conducted February 22 to March 14, 2016, compiled feedback from 530 small-business owners, 58 percent of whom had some experience in selling merchandise or services to customers outside the U.S.
This survey is valuable resource in a number of ways. First, it provides a comprehensive profile of the issues faced by small business exporters in the U.S., which is essential for organizations like Export-Import Bank of U.S. which provides financial support to U.S. exporters. However, it also has value to exporting firms because it provides insight into the experiences and issues faced by U.S. small business exporters. Whether confirming assumptions or highlighting unknown issues, knowing what your small business peers and colleagues are experiencing can help you make better decisions.
To aid you in that process, we have reviewed the survey and identified what we think are the top seven exporting takeaways of interest to small businesses. These are by no means comprehensive or final, but we hope it can serve as a starting point for discussion.
Takeaway #1: Most small businesses export physical goods.
Question: What kind of merchandise or services have you sold to a customer outside the U.S.? (Survey Page 6)
The majority of survey respondents export only goods (59 percent) while only 15 percent export only services. This fits our understanding that many firms that deal in services struggle to find safe ways to export, while firms that export physical goods are often able to do so.
Takeaway #2: Exporting takes less time than you think.
Question: Approximately how much time did you have to spend up-front before engaging in exporting? (Survey Page 7)
Many firms assume that exporting is time-intensive and complicated. While this is true in some circumstances, not all experiences are the same. Nearly half of exporting respondents said they spend as little as a few weeks setting up their exporting deals.
Takeaway #3: There are numerous resources available to solve export related challenges.
Question: Who helps you overcome export related challenges? (Survey Page 4)
As a business owner, you often have to turn to the experience of others to get the job done. When it comes to export-related challenges, your exporting peers turn to a variety of places from freight forwarders, to government resources and customs brokers.
Takeaway #4: Receipt of payment in advance is far and above the preferred payment term.
Question: Which of the following methods of payment do you accept from foreign customers? (Survey Page 11)
Any business owner will tell you that getting paid up front is preferred, especially when it comes to overseas sales. When that’s not an option, the shorter you can keep open account terms extended, the better. That does not mean those are your best or only options. EXIM export trade credit insurance can broaden your options for how you extend open account terms by insuring your foreign receivables.
Takeaway #5: Even for firms that export, North America is seen as the greatest emerging market.
Question: What region of the world do you believe to be the greatest emerging market for your business in the next three years? (Survey Page 4)
Unsurprisingly, U.S. businesses think North America holds the best opportunities for growth. This is followed by Northern Asia, South America and the Western Europe following close behind.
Takeaway #6: For many firms, finding financing for export operations is no harder than domestic operations.
Question: Would you say securing financing for your firm’s exporting operations is more or less difficult than securing financing for traditional business operations? (Survey Page 11)
Many firms assume that exporting is time intensive and complicated, and finding the right financing options is a big part of that. However, 61 percent of respondents found that accessing export financing is about the same as domestic financing. While circumstances vary, many inexperienced exporters encounter more difficulty because they don’t know where to go to solve the problem at hand. However, more experienced exporters are more aware of and better able to leverage powerful resources such as U.S. Export Assistance Centers, trade credit insurance and working capital loan guarantees, turn to the right resource the first time and find things much easier.
Takeaway #7: Concern around getting paid is the biggest challenge when selling to foreign customers.
Question: What do you consider the largest challenges to selling your goods and/or services to foreign customers? (Survey Page 10)
44 percent of exporting respondents cite "worrying about getting paid" as their biggest exporting challenge, which aligns with takeaway number four, which outlined to general preference of exporters to receive cash-in-advance. There are, of course, many reasons why this may be, but what we have come to realize at EXIM is that many firms who want full payment in advance and worry about getting paid, don’t know about the options to mitigate those concerns with trade credit insurance and working capital loan guarantees.
Interested in learning more about the nuts and bolts of exporting? Join the 58 percent of NSBA survey respondents who have exported and grow your international sales today!