Exporting can help your business:
- enhance domestic competitiveness
- increase sales and profits
- gain global market share
- exploit corporate technology and know-how
- extend the sales potential of existing products
- stabilize seasonal market fluctuations
- enhance potential for corporate expansion
- sell excess production capacity
- gain information about foreign competition
In comparison, there are certain disadvantages to exporting.
Your business may be required to:
- develop new promotional material
- subordinate short-term profits to long-term gains
- incur added administrative costs
- allocate personnel for travel
- wait longer for payments
- modify your product or packaging
- apply for additional financing
- obtain special export licenses
These disadvantages may justify a decision to forego exporting at the present time. For example, if your company's financial situation is weak, attempting to sell into foreign markets may be ill-timed. On the other hand, some companies have been successful selling abroad even before they have made any sales domestically:
Landmark Systems of Vienna, Virginia, had virtually no domestic sales before it entered the European market. Landmark had developed a software program for IBM mainframe computers and located an independent distributor in Europe to represent their product. In their first year, 80 percent of their sales were attributed to exporting. In their second year, sales jumped from $100,000 to $1.4 million - with 70 percent attributable to exports.
As you can see, there are no hard-and-fast rules as to which businesses should export, and which should not. In the case of Landmark Systems mentioned above, a foreign distributor produced results before any significant domestic sales occurred.
Landmark System's decision to export, like that of many other small business exporters featured in this guide, was based on careful planning.
