Unlike small business owners in other parts of the world, U.S. entrepreneurs do not tend to think globally about potential markets for their businesses.
The United States International Trade Commission (USITC) reports that while 31 percent of exports from the European Union are generated by small and medium enterprises, only 13 percent of U.S. exports come from small and medium businesses. And another government report reveals that only 1% of U.S. small businesses engage in exporting.
International trade is a key driver of small business success according to a recently released study by IHS and DHL Express. Of the small and medium enterprises surveyed, 26% of the companies that were trading internationally significantly outperformed their market, in contrast to only 13% of those with operations only in their home country.
While many U.S. entrepreneurs seem content to pursue business only within our borders, we cannot ignore that over 95 percent of the world population lives outside of our country. And small business owners who are part of the 95 percent of the world outside the U.S. are aggressively using the digital economy to help them expand their small businesses into the U.S. market.
There are many barriers that keep U.S. business owners from seeking customers in other countries.
Certainly regulatory and trade barriers play a significant part in the reluctance of entrepreneurs to engage in international business. However, small businesses in any country face those same challenges.
There are a number of resources available to assist a small business looking to expand internationally. The Small Business Administration offers helpful advice on importing and exporting and has a loan buy topamax weight loss program specifically designated to assist with financing international activities. There is a long list of other governmental agencies with specific programs to assist businesses wanting to become global. And there is an entire industry of firms that specialize in facilitating international transactions.
In hearings that were held around the country, the USITC found that U.S. small business owners also identify language, cultural differences, and lack of knowledge of foreign markets as significant barriers preventing them from seeking a global market strategy.
Americans don’t travel abroad at the same rates as people from many other countries and few of us are fluent in a second language. No doubt, both of these contribute to our unease in conducting business in a culture we are not familiar with using a language we do not understand.
Whenever Cordia Harrington, CEO of The Bun Company, talks to my entrepreneurship students she strongly encourages them to travel abroad to prepare themselves to become part of the global economy. That really is good advice for any entrepreneur.
Those of us in higher education are certainly trying to help future entrepreneurs overcome the barriers of language, culture, and knowledge. Research into study abroad programs finds that even short-term international experiences can have a significant impact on students’ attitudes. I will be taking two international trips this summer with Belmont students to encourage them to think more globally.
All entrepreneurs need to better prepare themselves for the emerging global economy. Get a passport and travel abroad. Maybe even learn a second language. You will be amazed at the opportunities you will find for your business.
Very Nice! Jeff, What motivated you to call this blog “American Entrepreneurs Late to the Global Economy”, not that the title does not go with the content, I am just wondering. Thank you for the article Jeff.
Though it sounds like entrepreneurs have their fair share of hurdles to jump through to establish themselves as foreign exporters, it sounds like that’s where business is headed. In fact, I am surprised nowadays when I order a product made in America. This is not intentional, but overseas companies are advertised so much more on my feeds online, and they often happen to be cheaper. Though I know this is not great for American business, entrepreneurs should use this as an example as to why they should consider jumping through some hoops in order to export their goods to other countries. What many Americans often fail to consider is the idea that the world is so much bigger than just the US. There are so many opportunities awaiting American entrepreneurs if they are willing and able to rise up to the challenge!
This is a great commentary on an issue that I have not thought that much about. It is very uncommon for me to hear about entrepreneurs who are trying to reach the global market and yet you see goods being imported to the US every day. I agree that traveling abroad is very important in joining the global network and I am excited to do so this fall.
Hey Professor, I think this is a great point about America’s unwillingness to integrate into/do business with the world economy. I believe this is evident in other areas of life, like language. English is typically standard around the world, because Americans are seemingly unwilling to explore the world around them.
To me, it’s very interesting that today entrepreneurs haven’t thought about the economy globally say like a small business would due to the growth of the company. It is very important to overcome the things that might stand in the way of being successful, so get in front of them and do as you need to succeed.