Middle-Market Companies Aren’t Taking Advantage of Export Opportunities, Study Says

Among major metro areas, Miami—not surprisingly, as it is the U.S. gateway to Latin America—was the leader for mid-market companies engaged in exporting with 20%, distantly followed by Tampa-St. Petersburg, 9%, and Houston with 9%; Los Angeles-Long Beach, 8%; Chicago, 7%; and metro New York, 6%. With the exception of Chicago, all other locations are coastal.

While this is only one survey, for the most part, these numbers show that U.S. mid-market companies have been falling down on the job when it comes to tapping into the vast potential of exports.

“I’m not sure anyone understands why,” Ed Marsh, export advisor and consultant to American Express, told Mid-Market CEO Briefing. Despite the Internet making the world of e-commerce flat, “it’s interesting in that many mid-market companies punch so far above their weight domestically, and that contrasts very sharply with their export performance, which is substantially less.”

He feels these three trends may play a role:

1. Assuming only the big-company model works. Mid-market CEOs may mistakenly assume the way in which they must “go global” is “the way large companies do: They pick a market and take years and years and make a big investment or launch a big project, and they wonder if it’s really worth it,” Marsh said. “It makes them gun-shy about doing it.”

Instead, Marsh suggested, leaders of midsized firms should leverage their strengths but take an entrepreneurial approach to opening new markets. “Take less of an approach of planting the flag and sticking with it no matter how bruised you become, and more of an opportunistic one.” A way to do that, he said, might be setting up an indirect channel, such as through a joint venture.

2. Figuring they need to saturate the U.S. first. The longer a company is in business, the less likely it is to become an exporter. “There is a myth that you have to saturate your domestic market before you go global,” Marsh said. “But mid-market companies don’t have to wait for that point now in part because exporting is easier than ever.”

3. Believing manufacturing is the only export opportunity. Traditionally, of course, manufactured goods have been the staple export of American firms. “But there are lots of export opportunities now for other sectors, particularly service companies,” Marsh said.

While the strong greenback retards export growth for some companies, now might be the best time for mid-market CEOs to take another look at exporting. That way, when the currency differential changes again, they will be ready.