Small businesses trading internationally are most positive despite recession.
Despite the downturn, small business owners—especially those who have expanded to international trade—are optimistic about their prospects for growth, according to a survey conducted by UPS.
The Atlanta-based shipping firm surveyed 600 businesses between September and October and found 91 percent expected their company to be in the same or better financial condition in a year. In December, after economic conditions worsened, the company did a follow-up and found that 86 percent of 151 respondents were still positive about the future.
Small businesses that trade internationally are the most positive. Fifty-six percent of these owners expect their companies to be in a better economic position in one year, compared to 41 percent of owners whose businesses do not trade across borders. In the second survey, 62 percent of globalized respondents were optimistic, compared to 39 percent.
Professor Jeff Rosensweig of Emory University's Goizueta Business School suggested that these companies' global reach allows them to escape the full impact of the downturn in the United States.
"There are some major countries, major markets, that have decoupled from this recession and are still growing, including China, India, and Brazil," he said.
In such uncertain economic conditions, small businesses need to be diversified. But offering several products requires efficiencies of scale that are difficult for even large firms to achieve. Instead, Rosensweig recommends focusing on the company's core competency and trading across several markets.
"The small businesses that are optimistic are the ones that can look at a market, Asia, and see that the forecast is for continued growth, and spread their eggs out among several national baskets—while trying to make the best egg," he said.
Despite the opportunities for trade, 73 percent of respondents aren't exporting and don't plan to. But as more small businesses recognize the potential length of the US downturn, and as they realize more globalized firms are out-competing them, Rosensweig expects them to reconsider.
"They will be finally motivated to start going global," he said.