There are many voices calling on Canadians to expand overseas to seize growing business opportunities in diverse global markets. In fact, Canadian exports rose 5.7 per cent in 2014, according to Economic Development Canada.
All too often, we hear that Canadian businesses, including small and medium-sized enterprises should go to China or other emerging markets. However, with a surging American economy, weak Canadian dollar driving exports and falling oil prices, the time is right for Canadian SMEs to expand south of the border. Here are five reasons why:
1. Unlike other overseas markets, the U.S. marketis picking up steam and the greenback is strong. In fact, the American economy is on track for its best year since 2005, according to the International Monetary Fund.
2. The U.S. market, while very different, is closer, more accessible and more familiar than others. That cultural familiarity, geographic proximity and strong historical connections make establishing a business relationship south of the border far less daunting.
3. There are plentiful sources of capital right now, on both sides of the border, looking to finance growth south of the border. Whether it's private equity funds or family investors, people have moved on from 2008 and are ready to invest again.
4. There is a major shift occurring in a number of industries, such as automotive and aviation manufacturing, diverting operations from Canada to the U.S. and Mexico. This presents an opportunity for Canadians to capitalize on growing markets, while keeping strategic planning functions in Canada.
5. Last but not least, success in the states often leads to success in other export markets. Building a business infrastructure there is a perfect launch pad to expand to other economies, such as India, which, the IMF predicts, will be the fastest growing economy in 2015 along with the U.S.
Sure, there are many challenges. It is not easy to open a U.S. office. There's no shortage of logistical issues – everything from accounting and tax planning to incorporation, office space, banking, payroll and benefits coverage.
So, what's the good news? When your business is ready, with the right strategic decisions and sufficient financing, you can reap immense rewards in the U.S. market. Many thousands of Canadian SMEs are achieving great success in this way.
Here are a few things I've learned over 30-plus years doing business outside of Canada:
- Americans are generally open to buying from Canadians.
- Decision-makers at U.S. companies, who may have 10 times the budget of their Canadian counterparts, will not necessarily have more knowledge or experience. At the end of the day, they tend to rely more on relationships and gut feelings than concrete evidence that what is being proposed has already been proven in the U.S. market.
- Americans are much more prepared than Canadians to take a risk on a new idea or supplier. The relationship will also be cut off quicker, if promises are not fulfilled.
- An enthusiastic team of Canadians can more than hold its own against U.S. competition.
When expanding to the states, there's no blueprint, but there are limitless options for growth. Some possibilities include selling over the web and fulfilling orders from Canada, sales forays at U.S. trade shows, client visits by Canadian-based sales reps, setting up a network of sales agents and distributors, setting up one's own U.S. sales office, investing in a U.S. production or service facility, or acquiring a U.S. business.
These are just some of the options. At the end of the day, success boils down to bold vision, lots of guts, amazing people on your team and smart strategic thinking.
Jim Shenkman is president of Bivio Events Inc., organizer of the first annual Expand in the USA conference in Mississauga, Ontario on June 16 and 17, 2015. He can be reached at email@example.com.