Unlike small business owners in other parts of the world, U.S. entrepreneurs do not tend to think globally about potential markets for their businesses.
The United States International Trade Commission (USITC) reports that while 31 percent of exports from the European Union are generated by small and medium enterprises, only 13 percent of U.S. exports come from small and medium businesses. And another government report reveals that only 1% of U.S. small businesses engage in exporting.
International trade is a key driver of small business success according to a recently released study by IHS and DHL Express. Of the small and medium enterprises surveyed, 26% of the companies that were trading internationally significantly outperformed their market, in contrast to only 13% of those with operations only in their home country.
While many U.S. entrepreneurs seem content to pursue business only within our borders, we cannot ignore that over 95 percent of the world population lives outside of our country. And small business owners who are part of the 95 percent of the world outside the U.S. are aggressively using the digital economy to help them expand their small businesses into the U.S. market.
There are many barriers that keep U.S. business owners from seeking customers in other countries.
Certainly regulatory and trade barriers play a significant part in the reluctance of entrepreneurs to engage in international business. However, small businesses in any country face those same challenges.
There are a number of resources available to assist a small business looking to expand internationally. The Small Business Administration offers helpful advice on importing and exporting and has a loan program specifically designated to assist with financing international activities. There is a long list of other governmental agencies with specific programs to assist businesses wanting to become global. And there is an entire industry of firms that specialize in facilitating international transactions.
In hearings that were held around the country, the USITC found that U.S. small business owners also identify language, cultural differences, and lack of knowledge of foreign markets as significant barriers preventing them from seeking a global market strategy.
Americans don’t travel abroad at the same rates as people from many other countries and few of us are fluent in a second language. No doubt, both of these contribute to our unease in conducting business in a culture we are not familiar with using a language we do not understand.
Whenever Cordia Harrington, CEO of The Bun Company, talks to my entrepreneurship students she strongly encourages them to travel abroad to prepare themselves to become part of the global economy. That really is good advice for any entrepreneur.
Those of us in higher education are certainly trying to help future entrepreneurs overcome the barriers of language, culture, and knowledge. Research into study abroad programs finds that even short-term international experiences can have a significant impact on students’ attitudes. I will be taking two international trips this summer with Belmont students to encourage them to think more globally.
All entrepreneurs need to better prepare themselves for the emerging global economy. Get a passport and travel abroad. Maybe even learn a second language. You will be amazed at the opportunities you will find for your business.