Beyond Our Shores: Mid-Sized U.S. Firms Find Success Exporting Internationally
As 2014 came to a close, the U.S. economy was showing real signs of resurgence. With GDP growing at 4.6% in the second quarter, the economy was at its strongest point in the last five years. Some had begun to wonder if the economic outlook would ever brighten again, but heading into 2015, there is definitely a new optimism in the air.
Of course, good news is fragile. A sluggish European economy, a Russian recession, a retrenchment of the Chinese economy; these are potential negatives that could reverberate around the globe. Still, the overall picture is positive, and this presents unprecedented international growth opportunities for mid-sized U.S. businesses. These firms represent just 3 percent of U.S. companies, yet they account for one-third of the nation’s jobs and GDP. Mid-market firms are absolutely essential to American competitiveness and economic growth moving forward.
Today, the world is still clamoring for U.S. goods and services, but the biggest opportunities for business expansion are taking place beyond our shores. The International Monetary Fund estimates that in the next five years, nearly 80 percent of global economic growth will happen outside of the U.S. As globalization and world urbanization continue, emerging markets with robust middle- class populations will need the products, infrastructure, and business services American mid-sized businesses provide so well. This burgeoning worldwide middle-class will have $35 trillion to spend between now and 2030, and will require $50 trillion of new infrastructure and housing development.
North America has traditionally been the source of most middle- class consumerism, but as the 21st century unfolds, Asia will be home to more than 50 percent of the middle- class population globally. This presents tremendous opportunities for U.S. mid-sized companies willing to evolve and engage in the international marketplace. World trade expanded an impressive 26 percent from 2009-2013 and totaled $17.4 trillion. Still, most mid-market U.S. companies have not taken advantage of the obvious opportunities available to them. Exports are accounting for incredible economic growth in America’s metropolitan areas for mid-size firms willing to explore doing business internationally.
A recent analysis by Stone and Associates estimates there are nearly 80K small and mid-sized U.S. businesses capable of excelling on the world stage. In fact, during the worst times of the recent recession, mid-market manufacturers who exported achieved 35 percent revenue growth while other firms declined or went under altogether. Exporters of professional services doubled revenues in this same time period. Even companies who didn’t export fared better by being trained to adopt an international perspective concerning innovation, R&D, investment, supply chain strategy, staffing, and logistics.
There is a genuine positivity among U.S. mid-sized companies that are now exporting globally. They are able to increase payrolls and elevate their status and competitive advantage at home. International competition inspires the development of superior services and products, promotes intelligent investment, and fosters strengthening of core company values.
Until now, most mid-market firms have only operated domestically. However, insightful company leaders are beginning to see the potential of doing business on an international basis for increased profitability, a competitive edge, and for overall diversification. As globalization continues, with it has come a worldwide growth of middle-class economic power. This creates an increasing demand for goods and services. These are definitely advantageous times for innovative mid-sized firms stateside that are willing to reach beyond traditional domestic markets.
Trade and regulatory barriers have eased, and new technologies are allowing mid-sized companies access to burgeoning international trade. Despite this window of opportunity, only 40 percent of mid-sized companies have taken advantage. Resistance to change is typical, but bold companies with vision are reaping the benefits of expanded growth and improved revenues. Clearly, now is the time for mid-markets firms to discover their potential on the international stage. 2015 affords mid-market firms the chance to diversify and increase revenues. It also opens doors to new and reliable sources of well-paying, sustainable jobs for U.S. workers.
It is important for companies interested in venturing into international markets NOT to do it alone. Logistics, export costs, the need for additional overseas collaboration; these and other critical concerns can derail the best-laid plans and necessitate the professional oversight of experienced consultants, data analysts, and those with region-specific market knowledge. This is where SIS International Research can be of invaluable assistance. SIS can help you navigate the global marketplace with critical, real-time knowledge and information designed to facilitate your transition from being a domestic business to integrating globally and truly understanding new markets, cultures, and international business practices.
Whether helping mid-sized firms manage capital and risk, assisting in compliance with unfamiliar rules and regulations, supplying our unparalleled marketing research capabilities, or advising on matters of talent and logistics, SIS is an integral component of any successful international outreach. Consider this as well. Effective international expansion can counter the encroachment of foreign competitors domestically. It’s been said that the best defense is a good offense, and it is undeniably true.
We believe you are forward thinking or you wouldn’t be reading this. 88 percent of U.S. mid-market firms never entertain the thought of doing business internationally. Frankly, this is backward thinking. The real risk lies in sticking with the status quo; thinking that doing things the same old way will yield a new and improved result. It won’t. We know that there is a growing demand for the quality goods and services U.S. mid-sized businesses have to offer, in Asia, Africa, Europe, South America, and all around the world. SIS International Research will help your business to unleash all of its untapped international potential. Discover the progress and profitability attainable in thinking globally.
Some information for this article was obtained from the following sources: Wsj.com, Bostonglobe.com, Brookings.edu, Usnews.com, Marketwatch.com, Trade.gov