New Data: 63 Percent of Global SMBs Report International Business Growth
Despite rumblings of a trade war, Brexit moving forward, and growing populist movements, data released by currency exchange provider OFX show over half (57 percent) of 500-plus small businesses surveyed are confident about their global operations and 63 percent report good-to-booming global growth in 2017.
While optimism and growth remain strong among small businesses, optimism has experienced a dip compared to last year’s report, taken before the presidential election, when it was as high as 96 percent. Still the majority of SMBs are positive. When asked about specific plans for global growth in 2017, expanding into new international markets ranked highest, followed by adding more foreign suppliers and hiring skilled workers from abroad.
OFX commissioned SurveyMonkey to poll over 500 U.S. SMBs with a global presence, identifying trends and market sentiments about their current and future international operations.
“New technologies continue to open doors to international expansion in ways not previously possible, and SMBs are one of the largest groups taking advantage of these new ways to work,” said David Nicholls, head of payment solutions at OFX. “But with every new opportunity comes challenges, especially when we constantly hear about global instability. The fact that SMBs are still optimistic about operations abroad, are growing and expect to grow more tells us that SMBs might hold the key to economic stability on a global scale.”
New online commerce channels and tech tools are making expanding internationally easier. OFX’s data spotlights where SMBs are taking their global operations, as well as flags the barriers to entry and how external events are affecting their ability to do business.
The survey shows that Canada (37 percent) and Mexico (21 percent) are, by far, where US-based global small and medium businesses (SMBs) have the most business dealings – something to think about with regard to a NAFTA renegotiation.
The findings also reveal that the top three ways businesses have grown include entering new markets,
adding better suppliers, and adding more skilled talent. Those are also the top three strategies for growing their companies in next 12 months.
Global SMBs look outside the US to hire for access to higher quality higher quality talent, according to 26 percent of respondents, as opposed to cheaper talent, as cited by 20 percent.
The top international markets where SMBs currently operate are Canada, Mexico, Western Europe (UK, Ireland, Belgium, Switzerland, and the Netherlands), and China/Hong Kong and Japan.
Markets where SMBs are planning further expansion in 2017, ranked in order are Canada, Western Europe, Mexico, China/Hong Kong and Japan, and South America.
Fifty-nine percent of the survey respondents expect international revenue to increase in in the next 12 months by at least 10 percent. Thirty-five percent report reverting currency back to US dollars is the biggest challenge to managing money overseas.
Barriers to doing business internationally for SMBs include high taxes and tariffs, border delays and inspections, language barriers, too much regulation, weak economies.
With regard to trade relations the most concerning factors for SMBs (in order of importance) are: free flow trade and commerce, customs duties (taxes and tariffs), and foreign currency fluctuation.
The top external events SMBs are most concerned about with regard to their business (in order of importance) are: global market instability, rising US interest rates, global terrorism, and rising US nationalism.
Sixty-five percent of SMBs have suppliers or vendors they work with outside of the US. Thirty-six percent of SMBs have customers in two to three countries and 31 percent have customers in four to 10 countries. Retail/ecommerce, business services, and consumer products are the top three industries where SMBs have international operations.