Exports: the next big thing

Research shows an increase in overseas sales by companies already exporting, and a growing interest in exporting among those who have yet to test the international waters.

Exporters say demand for their goods, from clothing to blankets to crop dusting planes, is rising. That makes it worth their while to deal with the complexities of exporting, including logistics and complying with the varying regulations of overseas markets.

Sixty-four percent of small businesses are exporting goods or services, up from 52 percent in 2010, according to a survey by the National Small Business Association and the Small Business Exporters Association. And 63 percent of non-exporters said they’re interested in selling overseas, up from 43 percent, according to the trade groups. Of those who are exporting, the majority — 54 percent — get less than 10 percent of their revenue from overseas sales.

That’s a comeback from the decline that started when the economy began to slump. The number of established small businesses that received at least 25 percent of their revenue from exports fell from 12 percent in 2008 to 10 percent in 2009, and then dropped to between 5 percent and 6 percent from 2009-12, according to a study by Babson College researchers. An established small business is at least 3½ years old.

The drop was less steep among younger businesses. Seventeen percent of new businesses were getting a quarter of their revenue from exports in 2007. That number was down to 12 percent to 13 percent the last three years. One reason for the difference between older and younger businesses is that established business owners may decide to focus on their core U.S. businesses and take fewer risks overseas during a downturn, said Donna Kelley, a professor of entrepreneurship at Babson College who co-authored the study on exports.

“We saw people’s perception about opportunities (like exporting) just go down,” Kelley said. But newer exporters may not yet have as solid a U.S. base to rely on, she said.

Another reason for the decline in exporting was the difficulty small businesses had finding financing for their exports. Many banks that believed small companies, including exporters, were too risky to lend to, said David Ickert, chairman of the National Small Business Association.

But the drop in domestic business during the downturn also made many companies consider exporting for the first time, said Ickert, who’s also a vice president at Air Tractor, an Olney, Texas-based manufacturer and exporter of crop-dusting and firefighting aircraft.

“Our country has had to look for more sources of revenue. One of the most obvious but most overlooked was exports,” he said.

Breaking into the export market can be intimidating. Many small businesses have shied away from selling overseas because of concerns about risk and the unfamiliarity of business practices in foreign cultures, especially where English isn’t spoken, Babson’s Kelley said.

“We tend to sell to what we’re familiar with — and we’re familiar with the U.S. culture,” she said.