Why small businesses should expand into overseas markets

Small business owners seem to be more optimistic about their futures than they have been in a few years – and they feel they might even be poised for growth, a new survey has found.

With the help of Populus, a market research firm, Sage Group PLC has released the findings of this year’s study of small to mid-sized businesses (SMBs) around the world. Dubbed the Sage Business Index, the survey is meant to gauge SMBs’ confidence and their outlook for their businesses.

This is the fourth year in a row Sage has sponsored this study, polling about 13,700 SMB decision-makers in 18 countries around the world, including Canada and the U.S. What researchers found was that confidence among SMB owners is the highest it’s been in the past four years of the study’s existence, with 43 per cent of respondents saying they expect to grow their staff over the course of 2015.

The businesses that were most confident tended to be the ones that were exporting their products and services to other countries, with 40 per cent of exporting businesses saying their number of exports has grown this year. That’s compared to 11 per cent who said their exports have actually decreased.

SMBs, exports
(Image: Sage).

“Confidence has been on the rise for some time but we appear to have reached a global tipping point where for the first time businesses are optimistic about the prospects for their business, their national economy and the global economy. This is underlined by their business predictions for the year ahead,” researchers wrote in a report.

What holds companies back from growing and doing business in foreign markets is a lack of support. Twelve per cent of respondents said they get government support for their work, but 30 per cent said the cost of logistics – like shipping – have held them back. Another 25 per cent said they feel like they’re being held back by the sheer force of competition internationally. These are pain points that governments could tackle for SMBs, with 29 per cent of respondents saying they feel governments could provide more financial rewards for troubling to export overseas.

Here in Canada, SMB owners are even more optimistic than their counterparts in the rest of the world. However, they were less sure about both the Canadian economy and the global economy, with researchers noting their confidence in these areas has edged downward.

That being said, 54 per cent of Canadian SMB decision-makers say they expect their revenue to grow by 2.5 per cent on average, and 37 per cent added their company will likely hire more people. Nine per cent said they expect to shed some jobs.

What’s unique about Canada is that unlike SMBs in other countries, most of the decision-makers polled for this survey said they aren’t doing any business overseas. Sixty-two per cent said right now, they’re not doing any business outside Canada, with just 15 per cent saying they have a presence in three countries or more. For SMBs that are exporting outside Canada, 67 per cent are in the U.S., while just four per cent are in China.

Still, there appear to be some gains from exporting. Thirty-nine per cent of Canadian businesses that do export said their export revenue has increased, while 54 per cent said it should keep growing in the next year.

It may well be that Canadian SMBs aren’t eager to export because they feel they don’t get enough support from the federal government. Just 18 per cent of respondents said they feel they get enough support to boost their exporting, while 31 per cent said they felt legislators and policy-makers should provide better financial incentives for them to push their businesses outside Canada.

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Jim Love, Chief Content Officer, IT World Canada

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Candice So
Candice Sohttp://www.itbusiness.ca
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

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