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Five reasons why Canadian small businesses should expand internationally

3-minute read

Only 12 percent of small businesses export their good or services. Yet, businesses that export have higher sales, grow faster and are more resilient in an economic downturn. You also give your business international visibility and can easily reach overseas markets with the help of the Internet.

Here are five reasons to expand internationally:

1. Take advantage of tariff-free countries

Canada has a relatively small consumer market with its population of about 37 million. The good news is that Canada is open to trade. With 14 free trade agreements in force, Canadian businesses have preferential access to more than 1.4 billion consumers in 50 countries around the world. Canada is currently exploring or negotiating 14 more free trade agreements, including one with China. These free trade agreements give Canadian businesses a competitive edge.

2. Ready or not, global competition is coming

Free trade agreements are reciprocal. As a result, foreign firms from the 50 partner countries under current trade agreements get preferential access to the Canadian market. This means greater competition for Canadian firms that only focus on Canada as their market. Canadian businesses that export are generally more diversified and less dependent on a single market, which reduces their risk.

3. “Made-in-Canada” has strong international appeal

Canada enjoys one of the best reputations in the world. The “Made-in-Canada” brand is a clear competitive advantage for exporters. According to an international survey, Canada is one of the most reputable countries in the world, ranking number one or two every year from 2012 to 2017. When it comes to exporting, Canadian companies can use the “Canadian” brand to market their businesses as high quality, innovative, trustworthy and environmentally friendly, to name just a few positive characteristics.

4. Exports boost sales and profits

larger share of their revenues comes from exports, according to previous BDC research—Exporting: A Key Driver of SME Growth and Profits—conducted in 2017 with almost 950,000 Canadian businesses. Other studies have shown that exporting businesses make more money, grow faster and are more resilient during economic downturns than those selling only locally. Businesses that export also have to be more competitive and productive to succeed internationally.

5. Digital technologies make it easier to export

Thanks to e-commerce and online marketing, Canadian small businesses can expand their customer base internationally at a low cost without major start-up costs, such as first establishing a strong presence in Canada or opening a store overseas. It’s now easier than ever to reach global markets and compete against larger businesses on an equal footing, and the investment to do so remains relatively small. In other words, Canadian small businesses can leverage the Internet to become micro-multinationals.

Before you can take advantage of expanding outside Canada, you need to have a website.

Almost half of Canadian SMEs still don’t have a website, according to BDC’s 2019 study, Expand Online: Strategies to Boost Sales, Profits and Exports. Just 8.5% of SMEs with a website have advanced online features like online payments. BDC surveyed almost 1,500 business owners with national or international activities to better understand their online presence and how they use Internet to grow their businesses.

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