If you want some perspective on just how big the global export market is, consider this: Canada’s 37 million people make up only .005 per cent of the earth’s population. In other words, for every possible customer you might sell to in Canada, there are 199 more out there in the global marketplace.
Yet Industry Canada research says that only about 10% of Canadian small and medium-sized businesses (SMEs) sell internationally.
Canadian companies that don’t export will give you many reasons for why they prefer to stick close to home. These include the idea that our domestic market is big enough to support their sales, that exporting is risky, or that they don’t have the knowledge or support to tackle international markets.
Breaking out of your comfort zone makes you stronger
While staying home may seem safer, research shows the opposite is true: businesses that export are more successful on many fronts. You don’t have to believe me. The studies confirm it. Studies from such reputable institutions as Statistics Canada, Deloitte and the Conference Board of Canada.
Other countries agree. For example, Bringing Home the Benefits, from the United Kingdom showed a strong majority found exporting led to more growth, increased credibility, better use of capacity, and increased the commercial lifespan of their products or services.
This is important because if other companies in other countries are recognizing the benefits of exporting, you can bet they will be, or already are, knocking on Canada’s door. So sticking with the home turf may not be as wise a growth or risk strategy as you may think.
7 reasons why exporters are more successful
- Exporters make more money. More markets and larger populations to sell to, equals more opportunities for sales. In fact, exporting companies make 121% more revenue than average.
- Exporters grow faster. The Industry Canada study also found that exporters grow faster than non-exporters. Between 2009 and 2011, 10% of exporters grew at an annual rate of more than 20%. For non-exporters, it’s only 8%.
- Exporters are more productive and competitive. Canadian manufacturers that export are 30% more productive for example. Exporting can also help boost your productivity because selling into larger markets creates economies of scale which helps to reduce costs and increases efficiency. Plus, you’ll be exposed to new ideas, technology and processes and potentially tap into cheaper resources and equipment. Improved productivity and lower costs also helps you be more competitive here at home.
- Exporters weather economic ups and downs. Putting all of your eggs into one basket leaves your company vulnerable. Diversifying into multiple markets means you can spread your risk.
- Exporters are better connected. Exporting pushes you to create global networks of distributors, partners, suppliers, customers, service providers, industry associations and government contacts. You also become market experts and between that and your networks, you’re ready to grab on to new opportunities.
- Exporters stay in business longer. Exporters know all about the survival of the fittest and studies show exporting helps you stay in business longer. How? Gaining a deeper knowledge of what works in other markets helps you adapt to changing market and customer demands, and contributes to overall flexibility and competitiveness.
- Exporters are more innovative. Being exposed to other ways of doing business means that you are constantly learning about new technologies and processes that can help you be more efficient or more relevant. It’s no surprise then that exporters are 25% more innovative and more likely to adopt innovative technologies. According to Industry Canada, 3 times as many exporters invest in R&D and new information communications technology, equipment and training.
Get your exporting business out there
Even if I’ve sold you on the benefits of exporting, taking that first step is scary. Let’s face it, getting out there is risky. What markets do I tackle first? How do I know if they want or need my product? How can I get my hands on the money I need to grow? If I make a sale, what happens if I don’t get paid? How do I protect my IP? The questions are endless. The simple truth is that exporting is hard work and you have to do a lot of due diligence BEFORE you put your toe in the water.
Fortunately, there is a place to start. Companies like the EDC, the Business Development Bank of Canada, the Canadian Trade Commissioner Service and your industry or sector associations are great resources for information.
EDC, for example, can work with your bank to get the money you need to support a sale and we’ve got insurance to help protect you against the risk of not getting paid.
If you think you’re ready to take on the challenge or just want to learn more about exporting, check out our other resources on https://www.edc.ca/ or check out this checklist to see if your company is ready to export.
You’ve got 7 reasons to believe why exporters do better and what do you really have to lose by taking the first step?