Many Canadian companies have room to further optimize exporting strategies
MONTREAL, April 10, 2017 /CNW Telbec/ - Highly successful Canadian exporters concentrate on three exporting essentials to sharply boost their profits, according to a new study released today by the Business Development Bank of Canada (BDC). But these aren't always the priorities that the average exporting entrepreneur in Canada emphasizes most.
Successful exporters closely study the competition in their target market, make exporting a management priority and devote adequate peoplepower to their efforts, the BDC study found.
Over four in 10 firms that make use of all three of these factors had annual international sales growth of 20% or more in the past three years. Among companies that use none of the three exporting essentials, only 7% have growth that high.
"Our research confirms an important message we've sought to pass on to Canadian exporters," says Pierre Cléroux, Vice President, Research and Chief Economist at BDC. "Before you expand internationally, it's vital to do your homework and align your company properly to succeed. That means devoting staff and resources and making exporting a management priority."
In contrast, the BDC study found that many entrepreneurs don't use the three exporting essentials found to be the most useful. In many cases, they prefer to adopt strategies that are less correlated with business success. For example, developing business contacts in target markets was chosen by the largest number of entrepreneurs (83%) as key to exporting success. By comparison, studying foreign competition is in fact a more successful strategy, despite the fact that it was chosen by less than two-thirds of business owners.
The study was based on a survey of 735 Canadian small and mid-sized enterprises (SMEs) that export. Four in five of the firms have less than $10 million in annual revenues.
Other findings in the study:
- Firms that evaluate their competitors before entering a foreign market have 171% higher odds of achieving high sales growth than those that do not.
- Viewing exporting as necessary for business success gives a company 278% greater odds of high sales growth.
- Developing business contacts in target markets gives a still-impressive 126% chance of higher sales growth, but it isn't as correlated with success as other exporting essentials.
As part of the study, BDC also partnered with Statistics Canada to take a closer look at Canadian exporters. This additional research found that exporting SMEs are more likely than other companies to post strong financial results. Also, first-time exporters are more likely to see repeat sales in the U.S. than in other parts of the world. After the U.S., the second international market for repeat business is China.
"Tapping into international markets can be daunting and often takes longer than expected," Cléroux says. "Our research shows that many of Canada's most successful exporters are profiting from highly effective strategies to boost their chances of successes."
The full BDC study Exporting: A Key Driver of SME Growth and Profits is available for download here.
BDC is the only bank dedicated exclusively to entrepreneurs. It promotes Canadian entrepreneurship with a focus on small and medium-sized businesses. With its 110+ business centres from coast to coast, BDC provides businesses in all industries with financing and advisory services. Its investment arm, BDC Capital, offers equity, venture capital and flexible growth and transition capital solutions. To find out more, visit bdc.ca.
SOURCE Business Development Bank of Canada
For further information: Maria Constantinescu, BDC, firstname.lastname@example.org, 1-844-625-8321