Small Business and Exporting

It’s commonplace to say that small businesses must think globally in the 21st century economy, but a new Small Business Administration (SBA)-sponsored study shows that acting on this belief is often easier said than done.

Palmetto Consulting, a Georgia-based consultancy, interviewed nine South Carolina-based small firms to identify current barriers to exporting. Most respondents did not systematically pursue export markets. Instead, they opted for a reactive approach that simply responded to customer inquiries. Why? Firm managers feared the complexity of the exporting process. Out-of-pocket costs do not seem to be the primary fear, but transaction costs (e.g., travel, shipping, logistics) did deter them from seeking foreign customers.

Researchers also identified psychological barriers. In some cases, business owners reported that they were more comfortable working with domestic customers in a local marketplace that was well understood.

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For companies in Montana and the surrounding region who are interested in developing or expanding their global opportunities, please contact Fraser Mcleay at the Montana World Trace Center http://www.mwtc.org 406-243-6621

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While the study’s small sample limits SBA’s ability to develop final conclusions from this research, the findings do shed light on key issues around small business exporting.

The November 2004 report, Costs of Developing a Foreign Market for a Small Business: The Market & Non-Market Barriers to Exporting by Small Firms, by Palmetto Consulting, is available at http://www.sba.gov/advo/research/rs241tot.pdf

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