For SMEs, this means that doing business will be even harder as profit margins get squeezed and consumers start cutting back on spending.
“However, this may also be the perfect time for small businesses to expand their offerings to foreign markets, in order to grow, while diversifying and minimising the risks of a weakening domestic economy,” says Bobby Madhav, head of trade and collateralised trade finance at FNB Business.
Notwithstanding the challenges associated with exporting, there are many benefits for SMEs that can get this right.
Madhav says the common question that SMEs often ask is "when is the right time to start exporting?", the simple answer is now; considering that the entrepreneur has a solid business concept and management structure, consistently grows revenue and is ready to expand into new markets.
Furthermore, size should not be seen as a barrier. Any business, big or small, with the right product or service offering, can succeed in the export market.
Madhav explains why SMEs should consider entering the export market:
“In order to become successful exporters, SMEs must first overcome start-up challenges and establish their businesses locally. Only then can the entrepreneur consider venturing into foreign markets in order to grow and scale,” says Madhav.
Moreover, expanding into foreign markets should be considered a long-term commitment. It may take a while for a first-time exporter to break even and start generating profit.
“SMEs that want to take their businesses to the next level should definitely consider the export market. It is only through growth that SMEs can make a meaningful contribution to GDP and further help the country to reach its National Development Plan (NDP) goals to create an estimated 11m jobs by 2020,” concludes Madhav.