Overhead view of shipping containers Currently, only 9% of small businesses export, but the report by Google and the U.S. Chamber of Commerce shows that increasing this number can offer substantial economic benefits. — Getting Images/pigphoto

Small businesses employ nearly half the private sector workforce in the U.S. and generate $6 trillion in annual economic output. Small business success is America’s success. While many people see small businesses serving customers locally, small businesses are increasingly playing a major role in exporting, and the impact is clear and measurable. Consider that:

  • Small business accounts for nearly one-quarter of U.S. exports, supporting more than 6 million jobs.
  • The total impact of small business exports in 2017 was an estimated $541 billion.

From these numbers, it’s clear that small business exporting is good for the economy and there’s plenty of room for growth. Despite the enormous potential, only 9% of small businesses currently export goods or services. According to a recent report from Google and the U.S. Chamber of Commerce, “Growing Small Business Exports: How Technology Strengthens American Trade,” the potential economic benefit of an increase in exporting by small business is substantial. Among the study’s findings:

  • Small businesses that export saw the share of total revenue generated by those exports increase 20% since 2016.
  • These businesses saw faster overall growth from 2016 to 2018 compared to that of non-exporting businesses (24.3% vs. 14.1%).
  • Small businesses that export increased the number of markets they serve, from an average of seven in 2016 to 10 in 2018.

While there are real barriers to overseas trade — with regulations, tariffs, logistics, language and exchange rates all listed as concerns by the small businesses surveyed for the report — there are digital tools available to overcome these barriers. But awareness of these exporting technologies needs to increase. In a key finding, the study reports that 73% of small businesses are not familiar with technologies that would ease entry into foreign markets.

One important recommendation in the report is to increase collaboration between federal and state governments and private sector stakeholders to assist small businesses in the use of export technology. The report also recommends encouraging innovators and technology providers to develop digital tools to address barriers identified in the report.

Online marketing and advertising

Reaching overseas markets can be as simple as flipping a toggle on a product listing, or as complex as setting up individual — and custom designed — websites in each offshore market.

Many small businesses begin global outreach through established venues. The tools have been developed and tested and the interface for the exporter is familiar.

Facebook International Selling, for example, provides companies with targeted advertising into markets defined by the seller. Options include worldwide, or by geographic region, free trade area or subregions within a country. E-commerce platforms like Etsy and eBay also allow sellers to choose the markets in which they want to sell. By virtue of their size and global reach, these platforms provide international exposure for small businesses wishing to enter new markets.

Another approach to international selling is to launch local websites in overseas markets. Sites with local domain extensions — “.uk” and “.de,” for example — make visitors feel more secure. One company taking advantage of this approach is Smart Retract. Founder and CEO Marc Pichik launched Smart Retract when a search for a way to contain his curious puppy left him disappointed with the available options. The company, based in Dubuque, Iowa, manufactures its products in the U.S., and exports to more than 20 foreign markets. Those exports represent 20% of the company’s sales, a number which is growing.

Pichik says Smart Retract leverages digital technology to find new customers through Google Ads.

“Google Ads gives us the online exposure that we need to get the word out there,” he reports. Smart Retract relies on Google Analytics to improve conversion rates on its website, where it uses a direct-to-customer model.

According to Pichik, YouTube also plays a part in the company’s overseas exposure. Shoppers around the world utilize the platform to post reviews, installation guides and videos of themselves unboxing the product. This helps generate awareness of Smart Retract in markets that would otherwise be unfamiliar with the product.

Tools for launching international websites are available at export.gov as well as through hosting sites, like GoDaddy, and international SEO consultants, such as Webcertain.

Language and cultural barriers

Businesses wishing to sell or service customers must be able to communicate with them, whether they are across town or across the ocean. While the internet has not done away with cultural and language barriers, technology has brought us tools to make them surmountable.

  • Google Translate: This free tool provides instant translation of a word, phrase or entire web page across more than 100 languages. It is available for use online or as a mobile app.
  • Search: Customs can vary greatly from one culture to another. A web search for business etiquette in a specific region or country will turn up tips for understanding the nuances of communication there.
  • Local trade officials: The U.S. Commercial Service (CS) offers a full range of expertise in international trade. By contacting an overseas office, a small business can get advice on local practices and customs.

Decisions about what product to ship into what market hinge on an understanding of diverse details — from regulations and tariffs, to local demand and competition.

Market identification

Decisions about what product to ship into what market hinge on an understanding of diverse details — from regulations and tariffs, to local demand and competition. Among the tools available are:

  • Google’s Market Finder: Using its existing customer insights and the information small businesses input, this tool provides local search trends and purchase behaviors for different countries and how-to guides about expanding to international markets.
  • The International Trade Administration’s How to Export section: This resource offers links and advice for assessing markets, preparing products for export, shipping, logistics and payments. The site also links to export specialists in over 100 cities.
  • Facebook’s Cross Border Insights Finder: This tool compares data across countries to help companies find the right market for their specific product.

Accepting payments

Collecting funds is high on the list of concerns for small business exporters. Exchange rates vary and fraud is a legitimate consideration when operating in unfamiliar markets. Tools to assist with billing and payment processing include:

  • Amazon’s Currency Converter for Sellers (ACCS). For those selling on Amazon, this tool eliminates the need to open bank accounts in each country where they do business. The ACCS facilitates the payment of funds directly into seller’s bank account in local currency.
  • PayPal Business Account: Businesses that accept foreign payments on a website through PayPal have options for how those payments are processed. Exporters can have the funds automatically converted into U.S. dollars at the prevailing rate, convert them manually, or leave them deposited in foreign currency in hopes of converting in the future at a more favorable rate.
  • E-commerce platforms such as Shopify and Squarespace: Tools integrated into these platforms allow for the collection of local currency. Funds are automatically converted to U.S. dollars, taking conversion off the list of details small businesses need to consider when selling overseas.
  • Help with disputes is available through the International Chamber of Commerce’s Dispute Resolution Services.

Logistics and customs

Concerns about shipping include how the product will cross a border, how it will pass through customs and how it will be delivered to the end user. It’s a lot to consider and there are tools to help, including:

  • Third party logistics companies (3PLs): Shippers, freight forwarders and customs brokers have invested in digital tools for dealing with complex customs regulations and inventory tracking. Small businesses who partner with these companies can take advantage of this helpful technology.
  • Guide to International Commercial Terms: Found on the logistics page at Google Market Finder, this tool provides a glossary of the standard trade terms used in contracts relating to the sale of goods to export markets.
  • Product classification: To determine what products are subject to what regulations in what countries, it is necessary to know the product classification. Tools to do that and an explanation of how the system works are available at export.gov.
  • Customs and tariff issues: Assistance with the fast-changing landscape of tariffs and customs is available through trade professionals in 106 U.S. and 77 foreign locations. Many 3PLs and freight forwarders offer web-enabled tools to assist with these complex but necessary details for small businesses shipping product overseas.

Given the right tools and information, American small businesses have the potential to increase exports, spur economic growth, and create hundreds of thousands of new jobs. The challenge is to work across the private sector and different levels of government to increase small business familiarity with digital tools and export technology, and to encourage companies to develop new tools to help small businesses grow.

Published December 11, 2019