By focusing in the local market only, U.S. companies ignore 95% of their potential customer base.
According to the U.S. Census department the current population of the U.S. exceeds the 315 million people, but the world population exceeds the 7 billion mark, or 22 times more than the U.S. At the same time according to The World Bank only 14% of the U.S. GDP is derived from exports, well below that one of countries like China (31%), India (25%), and Russia (31%). By focusing on the domestic market, U.S. companies may be forfeiting one of their best potential tools to grow their business, and improve their profitability.
The exporting process it is fundamentally no different from the standard Ansoff growth model, and companies can expand from their existing products and services, by growing into new markets (Market Development), new products (Product Development), or completely new products and markets (Diversification). By exporting U.S. companies could potentially improve their customer base by more than 22 times, take advantage of multiple export initiatives, and reduce their exposure to a single market collapse as it happened recently. According to serial entrepreneur Michael Fertik
The whole world is fast becoming one market — and money is a universal language uniting all, whether you’re selling in China, marketing to the French or closing a deal in New York City. It may be a happy accident, but it’s just as easy to generate revenue internationally as it is to do with your home base clientele.
In general companies that export either their products or services, generally create more jobs than those who do not, pay higher wages, are less likely to go out of business, and improve their ability to compete in the market. Even small and medium companies (SMB), are increasing their share of the U.S. export market from 27% to 34% just in the last 8 years, according to the U.S. National Export Initiative. For U.S. based companies facing a dismal 2% economic growth in 2013, the expected 4% potential grow of their close Latin America neighbors, and the benefits of the Free Trade Agreements with them; could represent the difference between making it or not at the end of the year.
Even with these benefits, many companies still hesitate to export because of the inherent fears associated with the process. From the potential challenges of marketing and selling your products abroad, to the difficulties getting paid, and actually delivering the goods to the customers, exporting will require a company to learn and develop the necessary processes to successfully accomplish it, but the rewards are limitless. If you are interested in learning more about the export process stay tuned, our next articles will help address some of the exporting requirements such as export marketing, selling, finance, and logistics.
Starting Up? Consider Going Global From the Start | Inc.com.
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