8 Undeniable Benefits of International Trade

Considering international trade but unsure if how it will benefit your business? We've got the low down for you.

Taking your business international is no small feat. It certainly shouldn't be undertaken without fully considering all the risks involved and how it will benefit your business.

Of course, every business has a different reason for going international. This isn't something that you randomly wake up one morning and decide - 'hey, I'm going to take my business international.' You'll need to weigh the pros and cons, think through the logistics of how it will be done successfully, understand the legal implications and even think about how you'll attract specialist talent.

And one of the things that will influence your decision are the benefits it will bring to your business. So, we're going to walk you through eight of the benefits you could expect with international trade.

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1: Create new streams of revenue

One of the most common, and perhaps one of the most obvious, reasons for international trade is to enter into new markets and boost your revenue. If your business is already seeing success domestically, you may consider expanding into new markets to continue your business growth.

There's only so much growing that a business can do in its domestic market. So, you may decide to expand to a new market as this will be the best way to increase your company’s revenue. Whether you choose to expand to emerging markets, such as South America, or very well established markets, such as the Middle East, taking your business international is a great way to enter into new markets and open up the potential for new revenue streams.

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2: Diversification will improve your competitive advantage

Another big reason why businesses expand into new countries is to diversify. Once you reach a certain point in your business, staying in your domestic country can actually become damaging.

There are many ways you can diversify your business abroad. Simply operating abroad in the same way that you do domestically is enough to diversify your revenue and make it more steady. For example, if the economy in your home market is turbulent, that could result in stalled revenue growth. So, you’ll have the international market to support your business.

You can also diversify your business by outsourcing aspects of the business, or sourcing products from other companies. Of course, trading internationally will come with its risks. But before you decide to outsource to any local contractors, you'll need to do your due diligence and make sure they're reliable, can pay their bills on time and can be trusted. One way to do this is to review their international credit report.

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3: Open the door to a new customer base

When you expand internationally, you get access to a whole new customer base. A new customer base brings with it a lot of new opportunities and this can allow you to grow your business in many ways.

When you go international, you'll usually take your existing products and services to this new country. However, once you have been operating in that country for a while, you may introduce new products/services to that country. Products and services that you might not necessarily have domestically. By expanding internationally, you're increasing your customer base tenfold which allows you to generate new business and new sales.

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4: Spread and mitigate risk

However, the reasons for expanding internationally are not limited to growing revenue for your business. In some cases, international trade is explored as an expansion route as it helps to spread the risk.

If you exclusively trade in one country, then there is a certain element of risk associated with this. For example, if there is a recession, or the market slows in your own country, your business is extremely vulnerable because all of your trade is in that country. So, operating internationally gives you a fallback option, and provides your business with more security.

Of course, going international is a risky move, but in the long run it can really pay off, and can become a risk management tool in itself.

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5: Use what you already know to boost operational efficiency and productivity

Studies have shown a clear link between international trade and an increase in both efficiency and productivity. Exporting goods and services internationally brings with it an economy of scale, and this is something that you can capitalize on.

When you have traded domestically for a certain amount of time, you will be able to see patterns within the business. This might include periods of time when business is slowing down and times of the year when you end up with a bit of a bottleneck. Trading internationally allows you to smoothen out your load and operate more efficiently throughout the year, without peaks and troughs.

Some studies have also shown that businesses that operate internationally tend to report better productivity than those only operating domestically. The reason for this isn’t totally clear, but it can only be beneficial for your company.

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6: Improve your brand reputation

Among other things, expanding internationally can really help your company’s image, and this is a reason why many expand internationally. When you are an international company you often end up becoming a household name, and this brings with it a lot of credibility and trustworthiness.

Brand recognition is a massive goal for most companies, and going international is a great opportunity for this. Going international allows you to target new customers, new countries and build a better reputation for your business. When it comes to brand recognition, you really want to be targeting as many people as possible, and this is why a lot of businesses go international.

Businesses that trade internationally are generally viewed favorably due to the risk and innovation associated with expanding abroad. So it is a great way to change how your business is viewed by the public.

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7: Reap major cost savings

Generally speaking, expanding internationally is great for cost savings in your business. While this isn’t the main reason that most companies decide to trade internationally, it is definitely an added bonus.

Some companies who have a lot of manufacturing involved in their business might choose to trade internationally in order to move their manufacturing operations abroad. Manufacturing operations generally tend to be cheaper abroad, so it can really benefit companies economically to do this.

There are some things that are simply cheaper to do abroad, and many companies capitalize on this to help increase their revenue.

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8: Get access to top-notch, specialist talent

Finally, some companies choose to take their business international because it gives them access to new staff and more talent. Expanding your business internationally gives you a much bigger pool of talented employees, allowing you to only employ the best for your company.

If you are trading in a foreign country, and need a customer service department for this country, it might be beneficial to set up a customer service department with individuals from this country. This will not only remove issues such as language barriers, but also help establish your business in that country.

There are talented people all over the world, and expanding your business internationally gives you access to these individuals and all of their talent.

About the Author

Steve Carpenter, Country Director, North America, Creditsafe

Steve Carpenter oversees business operations, sales, P&L, product and data. With an impressive 16-year tenure at Creditsafe, Steve has played an integral role in the company's international expansion efforts, spearheading global data acquisition and fostering global partnerships.

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8 Undeniable Benefits of International Trade

Considering international trade but unsure if how it will benefit your business? We've got the low down for you.

1: Create new streams of revenue

2: Diversification will improve your competitive advantage

3: Open the door to a new customer base

4: Spread and mitigate risk

5: Use what you already know to boost operational efficiency and productivity

6: Improve your brand reputation

7: Reap major cost savings

8: Get access to top-notch, specialist talent

About the Author

Get your free trial of Creditsafe

See how Creditsafe can help your business expand overseas whilst managing your exposure to credit risk

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