“The question for smaller businesses is how we ramp up exports,” he told Business without Borders.
With domestic consumption at a stubborn standstill, the administration of President Barack Obama, through its National Export Initiative, aims to double exports to more than US$2 trillion a year by 2014.
But with major companies such as Boeing Co. dominating the export landscape, the current administration has been tapping into organizations such as the NSBA and its affiliate, the Small Business Exporters Association (SBEA), to encourage smaller companies to increase their exports.
“Lots of companies do export but that only represents about 10% to 15% [of total small businesses],” said McCracken. “Most of those exports are to NAFTA countries [Canada and Mexico].”
The NSBA and SBEA are certainly not new players on the scene. Staunchly non-partisan, the NSBA has been advocating on behalf of small businesses and entrepreneurs since 1937. It has a membership of about 150,000 small businesses in all 50 states.
Often an unheard voice of American business, the impact of small and medium-sized enterprises on the U.S. economic landscape is significant. According to a recent survey by the U.S. Census Bureau, the U.S. has 27 million businesses with fewer than 100 employees. Small businesses account for 98% of all businesses with payrolls, 27% of business receipts, and 36% of jobs. In the aggregate, the small business sector is responsible for more than 40 million jobs and US$6 trillion in revenues (annual U.S. GDP is about US$14.5 trillion).
But the U.S. still ranks far below other developed countries in streamlining export procedures. In the latest World Bank report “Ease of Doing Business,” the U.S. ranked 20th in ease of exporting requirements among 183 economies the bank surveyed. That is largely because of bureaucracy. It takes an average of two days to prepare export documents in the U.S., another day for customs clearances, two more days for port handling and another day for inland transportation. In dollar terms, the bank said that worked out to be about US$1,050 per container of exports.
Despite efforts to promote exports through the Small Business Administration, the U.S. Trade Representative Office and the Commerce Department, the prospect of exporting remains overwhelming to small American exporters, McCracken said. “Taking that initial step is the hardest thing to do.”
In a detailed survey last year of American small and medium-sized business, the NSBA and SBEA found that of those respondents not currently exporting, the largest barrier is a perceived lack of exportable products and services (49%).
Thirty-eight percent of non-exporters said they don’t know enough about exporting and aren’t sure where to start. Twenty-eight percent cited concerns over getting paid from a foreign customer.
Among current SME exporters, chief concerns include getting paid and the complexity associated with exporting. The majority of small exporters rely on business earnings and savings to finance exporting —not bank loans or government-backed programs such as those from the U.S. Export-Import Bank.
To that end, NSBA and SBEA have been promoting through no-cost teleconferences ways for inexperienced exporters to link up with those who have cracked foreign markets.
“It is a whole different thing to talk to people who have done it,” McCracken said, noting that “the issues you face in Korea are different than those you face in Turkey.” The next teleconference will be held in late January or early February and will focus on export financing.
The ultimate goal, said McCracken, is to set the stage for rookie American exporters to develop their own markets.
SOURCE: http://www.businesswithoutborders.com/topics/opportunities/the-hardest-step-is-the-first-one/
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