Exports tend to be a viable growth strategy for many SMEs, despite business owners believing they have limited resources. Here's how to deliver greater earnings with minimal outlay.
Key challenges to a business
In a 2015 survey conducted by the SME Association of Australia (SMEA), business owners indicated the following four key challenges:
- growing the customer base (83 per cent);
- boosting profits (58 per cent);
- company expansion (46 per cent); and
- keeping ahead of competition (also 46 per cent).
With many SMEs starting small and having a growth strategy, business owners believe they have limited resources. Therefore, business owners tend to take a slow and steady, cautious approach to growth.
Yet the current market vibe appears to be one of optimism. According to the Australian government, it’s never been a better time to drive business growth through innovations and collaborative partnerships, and to look at different ways of growing our businesses.
How many SMEs actually export?
Macquarie University conducted a study recently to examine how SMEs use different types of networks as resource opportunities to expand their customer base through exports – given that exports tend to be a viable growth strategy for many SMEs, and networks as potential resource links to opportunities.
The study used a dataset of 2,263 SMEs from the Australian Bureau of Statistics, and asked SMEs how frequently their business sought information or advice from government, industry and professional networks.
The results indicated that, on average, the likelihood of SMEs receiving export income will increase by 65 per cent if all three of these network types are accessed, from between one and three times per year.
If we look individually at each network type, government networks have the most influence on SMEs' export potential, followed by industry networks and then professional networks.
Somewhat surprisingly, the research also identified a relatively low rate of exports among Australian SMEs.
Between 2004-2005, only 12.8 per cent of SMEs recorded some form of income from exporting. This figure dropped to 8.4 per cent between 2010-2011.
By comparison, 15 per cent of New Zealand SMEs reported export income in 2011, while a 2010 report suggested that one in four European SMEs (25 per cent) are exporting their goods and services.
What does this mean?
Pursuing export markets is a viable option to increase a business’s customer base, with every industry demonstrating some level of exports.
Of all exporting SMEs, 29 per cent comes from within the manufacturing sector. SMEs in agriculture, forestry and fishing sectors coming in at a close second at 28 per cent, while those in wholesale trade trails third at 17 per cent. Those business recording the lowest exporting rates are personal and other services, at 1.8 per cent.
Where to seek help and guidance
Exporting isn’t as daunting or risky as it sounds. Yes, the smart approach is to seek advice and information, but it’s also important to look for collaboration opportunities for long-term growth.
Government agencies are one body that can help SMEs. Austrade has a number of training opportunities and seminars (many of them free) to help SMEs be export-ready, and their export marketing development grant is a must-know for all Australian exporters.
Also look for collaboration opportunities within your network of your business associates. Suppliers, distributors, consultants and networking with industry associations and commerce chambers might direct you to some interesting partnerships for growing your business beyond Australia's borders.
Frances Chang is a lecturer in entrepreneurship and global marketing at Macquarie University, and Cynthia M. Webster is an associate professor in the department of marketing and management at Macquarie University.
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