Export to tap into profit and growth

Export to tap into profit and growth

by Roxanne Baumann, Director of Partnerships & Alliances, WMEP

If you’re in business, your primary purpose is to make money.   America is facing a huge challenge right now to increase or stabilize profitability, maintain or build new business, find growth opportunities and grow jobs.  We have been living this historic recession now for 30 months; a full year longer than the downturns of 1981 and 1973.  Today’s uncertain economy is uncharted territory for most of us.   Again, we are challenged to use American ingenuity and intellect to lift ourselves out of tough times.  But how?

Did you know 95% of the world’s population exists outside the US?  If you, as a small-to-medium sized manufacturer (SME); are selling only to the US market, you are limiting yourself unnecessarily.  The baby boomer generation in the US is reaching retirement age; and moving from acquiring goods, to maintaining what they have.  Demographics are shifting.  The new centers for demand, investment, and consumption will be centered on newly emerging economies in the eastern and southern hemispheres of the globe, like India, China, and Brazil.  Quite frankly, selling to domestic markets alone, you are competing for a dwindling market pie that gets fiercely more competitive daily.

National Association of Manufacturer’s (NAM) statistics shows exports have been outpacing domestic shipments since 2005.  In fact more than 50% of US manufacturing growth from 2005 to 2008 came from exports.  And, over 95% of these exports are coming from SME’s.  SME’s exporting averages about $ 1.4 million revenue annually.   But, here’s the gap……less than 1 in every 4 SME’s export.  The US not only under-exports; it ranks dead last in exporting manufactured goods.  Other countries average over 2 times greater.  We could double US manufactured export goods if we just exported at the world average.  Doubling US exports would support 2 million additional US jobs.  

What’s motivating you to export? 

1. Reaching more customers and
2. Mitigating US business condition risks. 

Export not only allows you to tap into new sales in foreign markets; but it keeps your competitors from growing and having a stronger product selection or less costly products to take to market.  Each time you interact with a customer, you gain powerful business intelligence to help you improve offerings and increase value.  Product research and developments costs can now be spread across a longer product life cycle; using economies of scale.

An “old” product in the US may be a new innovation in a foreign country.  Product life cycle may be sunsetting with US customers, but exporting that product can extend its life for years.  Traveling in Argentina in the 80’s, I was shocked to see brand-new 1968 Ford Fairlanes everywhere!  Ford built over 30,000 in Argentina from 1969-1981.  Companies can extend product life and reap profitable sales longer.

In my exporting experience, when domestic sales were down, typically international markets and sales were growing.  In today’s economic downturn, many foreign sectors are rebounding much faster than the US.  In addition, foreign markets provide offset seasonal demand for products.  At Harley-Davidson, while bikes were safely tucked away in our Wisconsin garages in January; folks in Australia were enjoying the height of the riding season. 

Yes, business is primarily in business to make money.  An export strategy is now essential to support that goal.  The learning and market intelligence you gain from pursuing international markets cannot be quantified.  Understanding your marketing value through the eyes of foreign customers and listening to their needs builds a global competitive edge for your business, adding value and enhancing shareholder wealth.

What would your profitability look like if you were accessing 25%, 30% or even 50% of your sales outside the US?   This is your wake-up call.  Having all your eggs in the US domestic economy basket is a risky strategy.  Resources, expertise, coaching, and SME’s like you with success stories are all available to help you on this exciting journey.  Any size company can do it.  Start with management commitment to learn the basics:  finding your best markets, finding distribution, finding customers, getting paid, mitigating risks, getting financing, shipping & logistics.  Keep your eye on ROI; and develop a customized export strategy to sell your products into 1 or 2 key new markets this year.  WMEP can help and network you in to the international community and ensure your success.

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