According to a new American survey, small and medium-sized businesses are showing a dramatic increase in exports or in their willingness to begin exporting. Released by the National Small Business Association and the Small Business Exporters Association, the survey of more than 500 small businesses showed that the number of firms interested in dipping into the export market increased from 43% in 2010 to 63% in 2013.
Corinne Pohlmann, vice-president of national affairs at the Canadian Federation of Independent Business (CFIB), could not point to hard data to indicate that Canada is experiencing the same trend, but speculated that a recent rise in e-commerce enables more SMEs to go beyond geographic borders. This in turn makes it easier for small businesses to leverage their specialties, “Where small companies can be successful is when they find their niche market,” she said in an interview with PROFIT. “A recent example is a company that just sells curling equipment, but all around the world. What a uniquely Canadian story,” she said, adding that she is familiar with another company that sells insurance to hockey teams in Europe.
While taking advantage of geography and a national reputation has worked for some companies looking to break into the export game, Pohlmann said that the trend she sees is more using knowledge and information to provide services around the world. “Another trend we’ve seen is a growing number of small companies who really just have their research and development in Canada, but their products are being built in other countries.” This kind of integration, Pohlmann adds, will allow SMEs to remain nimble and creative and capitalize on their strengths.
At the same time, the NSBA survey revealed that significant challenges remain for companies interested in exporting. An overwhelming 49% of small businesses that do not export cited confusion and bureaucracy as their number-one barrier to entry. Additionally, 79% of SMEs have some concern with whether upfront investments will pay off, an indication of an ongoing struggle to balance risk and reward.
To remain competitive as exporters, the CFIB recommends more free trade agreements, like the ongoing negotiations with the EU, continued efforts to minimize and standardize border deals, and for SMEs to work more closely with agencies like Industry Canada.