Fred Smith: How Small Business Can Achieve Big Business Success
Over the next decade, I believe revenue from our international operations will exceed our U.S. domestic revenues. That’s tangible evidence that we’ve reached a tipping point. Opportunities in emerging markets are outpacing those in developed economies. So it’s not a surprise that the largest economy in the world no longer belongs to a single country, but to the realm of global trade. Markets such as China and India, with their growing middle classes, are transitioning from producing nations to consuming nations.
So while I look at all of those packages being loaded in and out of our Boeing 777s and see a global transformation — small businesses should be looking at them and seeing their biggest opportunity.
I believe there are essentially four ways a business can make money. It can be done in a local economy, a national economy, in the global trading economy, or in the world’s huge financial markets. Ultimately, the small businesses that are able to move up this ladder — and evolve from local opportunities to national and global opportunities — will be the ones best-positioned for big success.
So what’s standing in the way of small business success? Today, the most significant factor is over-regulation. In the U.S. Chamber of Commerce’s most recent small business survey, 42 percent of small businesses cite it as a major concern, and 52 percent see regulation as the top threat to their business.
Similarly, enhancing free trade policies around the world nurtures a global marketplace where equal opportunity exists for business of all sizes. At FedEx, we support free-trade agreements because barriers to access are barriers to prosperity for businesses. We encourage smart policy decisions that make global connections easier. It’s becoming increasingly clear that global trade will continue to be our prime source of growth here in the U.S. Access to global markets leads to opportunity, and when global markets solidify, local economies can flourish.
Small businesses across the U.S. can absolutely achieve big success by connecting their business to the global marketplace. And there are four fundamental ways small businesses can get started today.
First, make a commitment to diversifying business. Adding international suppliers, distributors and markets isn’t just an opportunity to grow incremental revenue; it can also protect a small business against volatility in any one nation’s economy — including our own. With the help of the internet and global logistics, more small businesses have become part of the global supply chain than in any other time in our history. Now that 52 percent of small businesses are home-based, I think it’s fair to say that people are selling goods to the national and international market that they would have only sold locally twenty years ago.
Second, take advantage of easy access to technology. With the tools that are out there to help a small business source and manage its inbound and outbound inventory, opportunities abound to better and more cost-effectively manage business across continents and oceans.
Third, it’s important to understand a small business’ opportunities. The realm of global trade had a value of 18.3 trillion dollars in 2010. This growth is driven not only by worldwide gains in manufacturing, but also domestic spending increases in emerging markets. Consumer purchasing power is rising rapidly in countries like Brazil, Russia, India, and China. In India, consumer spending is projected to almost quadruple by 2020.
But not all emerging markets or international opportunities are created equal. One of the first questions a small business should get answered is: “Has the U.S. negotiated a Free Trade Agreement that makes it easier for me to export my products or services?” If so, they might have a competitive advantage in certain markets relative to products or services coming in from other countries. Currently the U.S. has 12 FTAs in force with 18 countries, including Korea and Singapore.
If things like FTAs already sound complicated, rest easier knowing how many resources are available — at a free or nominal cost — to help evaluate global opportunities relative to a small business’ unique offerings and goals.
- The U.S. Chamber of Commerce has an international section on its website with a wealth of information and tools.
- Another key resource is the National Export Initiative (NEI at export.gov), which is dedicated to increasing the number of companies exporting, as well as expanding the number of markets current U.S. companies sell to.
- At FedEx, we’ve joined forces with U.S. Commercial Services, creating a trade mission program that helps small businesses connect with industry leaders and government officials in emerging markets. In addition, FedEx offers online tools for easier customs clearance.
Last but not least, it’s really important to get small business voices heard. With economists expecting the U.S. economy to grow just 2.4 percent in 2012, and U.S. consumer spending to grow below trend, the time for international expansion is not only opportune but, in some cases, necessary for survival. But we’re now entering a period in which government intervention in business is as great as it has been since the era following the Great Depression.
This is a crucial time for small businesses to make sure their voices are heard loud and clear on Capitol Hill. One of the most important topics they can rally around is taxes and the cost of government compliance. We all know that every big business started out as a small business. When entrepreneurs become discouraged because of government regulation, we’re threatening not only the small business of today, but also the big business of tomorrow.
While big success isn’t in the future of every small business, both the opportunities and the path to capitalizing on them are clear.
- It starts with a change in mindset.
- It continues as small businesses more fully harness the power of digital technology and assess their potential points of international connection.
- Finally, it has to include making their voices heard, letting their representatives at the local, state and national level know what we all know: that small business will lead America back to full economic recovery.