It’s often been said that small business is the engine of the US economy. Therefore it follows that the swiftest way out of the current economic slump and the 10% unemployment would be to stimulate the SMB sector to go after stronger markets, i.e.: focus on building international sales.
In 2007 there were an estimated 200,000 large US firms (of more than 500 employees) with collective sales of $3.9T while there were 30 times as many SMBs with collective sales of $400B. Of the SMBs 70% did no exporting at all, 20% exported to one country (mostly Canada or Mexico) and a slim 10% exported to more than one country. How do we get more SMBs to export?
Among the emerging BRIC markets (Brazil, Russia, India and China), who have been able to do much more than stay afloat during this global slowdown, no question Brazil is most attractive for the US SMBs.
There are several factors which make Brazil stands out from all other emerging markets. Among them are the size and proximity, culture and affinity to the US and our products, recent history of 15 to 20 years of poli-economical stability, and a relatively clear 10-year forecast of continued growth.
Unlike most other emerging markets which are a day or more transoceanic flight away, a US executive can get to Brazil overnight and head to work the same day without jet-lag and only a few time zones difference. So in terms of cost, travel time and fatigue Brazil is much more attractive. This proximity facilitates being able to call on local staff, partners and customers more often and on short notice.
The US is Brazil’s number one economic partner today. There is a long history of trade between the two countries so the Brazilian society has a strong appreciation for American products and business style. While there are significant cultural differences between the two countries the similarities are much stronger than those of the US with most other emerging markets. The ease of doing business in a foreign country is in direct correlation with the pace of progress and to a large degree the ROI.
The strength of the Brazilian economy today can be directly attributed to the most recent 20 years of government investments and effective execution of long term plans in agriculture, alternate and renewable fuel, petroleum and local manufacturing. Today Brazil is among the world’s top food exporters, a major supplier of ethanol as alternative fuel, recently surpassed Mexico as the number two country with petroleum reserves in the Americas.
While the government continues to struggle with the infamous income-gap between the two extremes, this scenario should be viewed as an opportunity for every US SMB. On the luxury side, more than any other in the world, the state of Sao Paulo has the largest fleet of private jets and helicopter landing-pads, more Tiffani and Bulgari stores, and more Ferrari and Lamborghini automobiles. At another level, for example, only 44% of public educational institutions have more than 20 desk-top computers, thus there is an immediate need for infrastructure, training and application software. For a country which intends to compete globally the government will need to continue to make major long term investments; it’s estimated the current government has already invested over $100B in social programs and projects.
Looking forward the in-coming government resulting from the national elections later this year will no doubt make new announcements of future investments. Already known are some of the investments intended to prepare the country for the World Cup Soccer games in 2014 and the Olympics in 2016. Billions of dollars have been announced for renovating ports, roads and rail infrastructure, hotel and stadiums, electrical grids and telecommunications, etc.
No doubt that fear of the unknown is a major contributor to the US SMB resistance to the international market. However, a risk becomes an attractive opportunity when backed by a well researched plan, a budgeted commitment and the expertise to execute. These are the three components which will accelerate the SMB international business and assure success.