Many North American and European small businesses are bemoaning the rapid changes that are occurring in today's business environment. From constantly changing regulatory regimes, disruptive startups fundamentally altering if not destroying existing business models, to the increasing need of small businesses to address issues that are outside their core competencies such as social responsibility and environmental sustainability, small business are increasingly navigating a complex business environment.
While small businesses may be inundated with local concerns that form the foundation of their sales, there is increasingly a growing concern on the horizon that not only threatens North American and European small businesses, but multinationals as well. This threat is the seeming inability of both small businesses and multinationals to effectively develop not only products and services for the developing market, but also export strategies.
For many small businesses and multinationals, exporting is at the bottom of their priority list. While this prioritization may make short term operational sense, the long term consequences of failing to export are steadily increasing. These long term consequences include:
(1) Failing To Capture High Growth New Markets: Developing economies for all the fits and starts over the past decade are still a hotbed for growth. With younger demographics, rising middle class incomes and increasing demand for higher quality goods and services, developing economies are the future. While developed economies still offer growth potential, they are increasingly less forgiving due to an aging population, increasing competition and stagnating incomes.
(2) Enabling The Competition By Ceding Market Share: While small businesses and multinationals fight tooth and nail against a growing number of direct and indirect competitors in their local markets, just over the horizon are overseas emerging competitors that, while not a current threat, are an increasing future one. By ceding market share in developing economies, North American and European small businesses and multinationals are empowering new competition by giving them a strong financial and market share base on which to further expand globally, thus eventually enabling overseas emerging competitors to compete effectively in local markets.
(3) Ceding Brand Awareness: With developing economies increasingly becoming a source of immigration for both developing and developed economies, formerly domestic brands are now getting global recognition due to these migration patterns. Depending on the volume of migration and the potential for profitable distribution, emerging products and services which start off as an import trickle could eventually become an import torrent.
If developing markets are increasing both an opportunity and a threat, what should small businesses and multinationals do when domestic markets consume so much of their resources due to mounting complexity and challenges? There are a number of initiatives that can be taken, including:
(1) Integrate Into Long Term Strategy & Business Plan: While starting a business or even a product or service line in a large multinational, there are a million different factors to consider. Everything from gaining financial support to achieving sales targets to setting up basic operations would overwhelm even the most organized and diligent businessperson. Adding the export of a product or service seems insane or at the very least distracting but is increasingly necessary, if not in the short term, then for the medium to long term.
Integrating export into a long term strategy and business plan doesn't necessarily mean interfering with more urgent short term operational goals. It means undertaking short term operational goals to see how they fit in with the long term strategy. Just as every business has a vision they aspire to, exporting should be viewed in the same manner. While a business many not be ready to start exporting in the short term, it can lay the foundations in its short term decision making. Whether it is ensuring that their Internet presence is setup for future multilingual access, to planning for future operational expansion that takes into account international requirements (e.g. Multilanguage labelling, customs, etc.), businesses can take small steps to plan for future exports without distracting them from short term operational goals.
(2) Leverage Existing External Resources: The complexity and the resource consumption required are the primary challenges that businesses point to when they argue against exporting. While exporting can be a laborious process, it is one that can be and has been increasingly simplified. Globally, governments are setting up trade offices to assist businesses to take their first steps in exporting by providing a variety of services from market research to leads to potential partners and distributors. Businesses can take advantage of these resources for minimal cost and without the massive investment most businesses expect to undertake when exporting.
(3) The Lean Exporting Approach: As pioneered by Cristina Hernandez, a part-time international business professor at the Tecnologico de Monterrey in Guadalajara, Mexico, the Lean Exporting approach capitalizes on the lean startup concept developed by Eric Ries and adapts it to businesses interested in exporting for the first time. The Lean Exporting approach encourages businesses to follow their customers' lead in determining where to potentially export and provides a framework to export effectively with minimal resource investment.
Recently there is an increasing need for exports to be built into the growth strategy of any business. Without exports, businesses, whether they are small businesses or multinationals, increasingly risk their long term health and prosperity by ceding rapidly growing markets and brand awareness to up and coming competitors over the long term.
This is already occurring slowly in developing economies where consumers are more aware of Chinese and other Asian brands versus any North American or European brands. While catering to a growing lower and middle class in developing economies may not seem critical now to most businesses, one need only remember the power of Coca Cola and Levi's jeans during the Cold War to remember how critical brand awareness is to future growth and prosperity.
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