Why You Should Grow Your Business Through Exporting
Many Caribbean Small and Medium Enterprises (SMEs) have often viewed exporting as the domain of large or multinational companies. However, advancements in payment and information technology, expansion of logistics infrastructure, and negotiation of new free trade agreements have leveled the playing field allowing firms of any size to market and sell goods and services internationally. Here are a few reasons why exporting can open the door to limitless business possibilities.
1.Reach new consumers
For Caribbean firms exporting provides opportunities to reach and compete for new consumers and segments that exist in the large international markets of North America, Latin America, Asia and Europe. Consider, for example, how a firm in Trinidad and Tobago with access to a local population base of just 1.2M could benefit from exporting its goods and services to a market eight times its size, such as the Dominican Republic with a population of 10.3M.
2.Diversify your risk
Exporting provides an opportunity to avoid placing all of your eggs in one basket. Focusing your sales efforts and investments on just the domestic market makes your firm vulnerable to changes such as a downturn in the local economy or seasonal demand or increased competitive pressures. Exporting allows your business to spread or balance its risks so that you can continue to earn revenue and to pursue sales growth opportunities even when there is a contraction in your local market. An example would be a firm involved in providing goods and services for the Carnival season in their home market. Such a firm does not have to be limited by seasonal demand but can benefit from year round demand by exporting to markets where Carnival is celebrated at different times in the year.
3.Develop a competitive edge
Exporting can strengthen and prepare your company for the eventual arrival of international competitors to your shores by allowing your firm to learn how to navigate and succeed in an environment with new competitors, new consumer tastes and a new way of doing business. These unique challenges faced by exporters encourage the professional development and build inter-cultural awareness of the firm’s employees as well as sharpens a firm’s ability to respond and adapt to change. Successful strategies, products and activities developed for the export market can also be incorporated into the firm’s local operations which can propel it to new levels of consumer engagement, help defend its local market and even gain market share.
4.Build Brand Equity
Brands that are exported have the potential to benefit from higher brand equity than brands that are only sold in the local market since consumers may perceive them as more credible or desirable. Successful Caribbean brands Grace Foods and Angostura are examples that illustrate this increased brand equity.
5.Gain Foreign Exchange Earnings
Exporting is a great way to earn foreign exchange earnings as exported goods and services are invoiced and paid for in an international currency such as United States Dollars, Euro or Yuan. In regulated economies such as Cuba with foreign exchange controls, exporting is seen as a means of acquiring much needed foreign exchange earnings. Exporting can also provide a significant advantage to firms that import goods or services and must pay their foreign suppliers in an international currency. These firms will have ready access to foreign exchange and they will not be as vulnerable to foreign exchange fluctuations when paying their international suppliers.
6.Maximize (production) capacity
Exporting allows manufacturing or service firms to find new markets for their additional plant or human capital capacity that would otherwise be sitting idle. As firms utilize more of their capacity they can reduce the overall cost of their operations by spreading their overhead costs across more output. Another upside is the ability to leverage their increased purchasing power to negotiate better prices or terms with their suppliers.
If you have been sitting on the fence, discouraged by fear, or holding on to unfounded assumptions about exporting I hope that this post has pushed you one step closer to incorporating an export strategy into your business.