Many small business owners haven’t have heard of TPP, a landmark trade agreement that is currently being negotiated by The White House with 11 Asian countries. Many don’t care. But here’s why they should.
Top 10 Reasons Why Small Business Owners Don’t Care about TPP
1. 50% of small businesses fail after 4 years. Owners are focused on staying in business, which usually means focusing on local markets.
2. Small business owners wear multiple hats: they are sales, marketing, customer service, management, accounting, shipping, janitorial, legal, HR, purchasing, and R&D. They’re too busy juggling all their responsibilities to pay attention to seemingly remove trade policies.
3. TPP and trade discussions are often framed as being about creating jobs. While small business owners care about their employees, they don’t go to work every morning to create jobs. They go to work because they are passionate about what they do and believe they are providing a valuable good, service, or experience that the world needs.
4. Priority #1 for small business owners is their customers. Many have a small and customer base and have not yet established brand loyalty. To grow or get to profitability if they are just starting out, they cannot afford to have even one unhappy customer, particularly in today’s social media savvy and reputation-focused world.
5. Priority #2 for small business owners is their employees. Many view their employees as family and try to take care of them by creating a personable work environment and offering competitive wages and benefits to the best of their ability. Employees of small businesses are not just replaceable cogs in the wheel as they might be in large corporations. They are each critical players who often are highly engaged in running the business alongside the owner. That said, many small business owners struggle to meet payroll every two weeks, since wages are usually their biggest fixed cost.
6. As a result of #4 and #5, small business owners have a hard time engaging in seemly distant trade policy issues when urgent and personal issues presented by their customers and employees are facing them every day.
7. The U.S. is a big market and a continental economy. It is easy to trade across state lines, so small businesses focus first on growing to U.S. markets, rather than looking at opportunities overseas.
8. Small businesses face major logistical hurdles to exporting their goods and services: high out-bound shipping costs, lack of knowledge about overseas duties and customs, high tariffs on their products, unknown or complicated regulations governing their products (particularly true in the food industry), and lack of an easy one-stop shop for understanding global demand for their particular product and the trade rules and regulations governing their products. They don’t realize that TPP is a crucial part of the puzzle to reduce barriers to export – not only will it address tariffs and duties, but it will build momentum for knocking down barriers like high shipping costs and lack of market data.
9. Those small businesses that have exported all have export horror stories. In Hello!Lucky’s case, one such story was a bride in Spain getting her time-sensitive, custom-designed, high-end letterpress wedding programs getting stuck in customs the day before her wedding. She got them out just in time, the morning of her wedding, but it was not without a huge amount of stress for her and for Hello!Lucky.
10. Small business owners don’t realize that the future of their business is overseas. 95% of world consumers are outside of the U.S., and they want our goods. See below for more details about this historic, exponential opportunity for small businesses.
Top 10 Reasons Why Small Businesses Should Care about TPP
1. The future of small businesses is overseas and will be driven by e-commerce. 95% of world consumers are outside of the U.S. There as a rapidly expanding middle class in Asia, where TPP is focused: currently there are about 300 million in the Asian middle class (equal to the total U.S. population). By 2030, there will be more than 3 billion, representing 66% of the world’s middle class. These customers are all want the high-end, well-made goods that Americans design or manufacture: Apple products, Tesla cars, Hello!Lucky Egg Press and Rifle Co. greeting cards, Heath Ceramics, Shinola watches, Melissa and Doug educational toys, and all the latest boutique or innovative products from America’s thriving design, tech, and maker communities.
2. Almost every small business can be an export business. By 2020, the entire world population will be on-line. They will be shopping online with expectation of being able to buy globally. Even bricks and mortar stores – including service providers like a bed and breakfast – can export. Tourism is one of the U.S.’s biggest exports: through a little savvy online marketing, small businesses with a bricks and mortar presence can make themselves a go-to destination for tourists seeking a local, authentic American experience.
3. Current technologies make it easier than ever to start a small or virtual business. Sites like Square Space, Mail Chimp, and Stripe make it possible for anyone to set up an e-commerce site and start building community in a few hours. Crowd-funding platforms like Kickstarter and Indiegogo and peer-to-peer lending platforms like Lending Club make it easier than ever for small businesses to obtain financing. Marketplaces like Etsy, eBay, and Amazon Exclusives give small sellers a highly visible place to market their wares. Amazon has the potential to offer increasingly cost-effective distribution services for small businesses and to use its purchasing power and economies of scale to make small businesses more competitive on shipping cost and delivery times.
4. Customers overseas want your products. Consumers – especially the growing ranks of overseas middle class – want goods that are 1) useful 2) affordable and 3) reflect their human values and aspirations. Increasingly, U.S. made goods will meet all three of these criteria as our value-added manufacturing and innovative, well-designed and branded consumer goods sectors continue to grow (U.S. manufacturing is currently growing at twice the rate of the overall economy).
5. If TPP fails, foreign countries will increasingly shut U.S. small businesses out of their markets. They are not stopping to wait for us, and we will get shut out of global markets while countries overseas ink one-off trade deals that make it simple for them to trade with each other. In particular, some countries are trying to enforce protectionist internet laws that would be terrible for small e-commerce businesses, such as requiring overseas businesses to have a physical server on the ground in that country in order to do business. TPP will ensure that this does not happen.
6. The U.S. cares about global stewardship: everything from fair labor laws to environmental protection. TPP is the most progressive trade agreement in history in that it helps to bring partner countries in line with values that not only U.S. values but universal human values that are in the best interests of long-term peace and prosperity worldwide. Again, if we don’t lead the way, other countries will – specifically, China will. Would you rather have China setting environmental and human rights standards globally? Or the U.S.?
7. TPP will remove lower tariffs to U.S. small businesses doing business overseas and make regulations simpler and more consistent. The U.S. is currently an open market, and we need other countries to reciprocate to level the playing field. With inbound trade tariffs at just 1.9%, we make it very easy for other countries to do business with us. Many overseas countries currently do not reciprocate our open trade policies. TPP will change that, leveling the playing field and giving equal access to global markets on behalf of U.S. businesses.
8. Opponents of TPP are already vocally speaking on behalf of small businesses without our consent or knowledge. They claim that TPP is ignoring small businesses, and that it is catering to large corporations. They claim that if small businesses knew what was in the “secretive” trade deals, they would oppose it.
This couldn’t be farther from the truth. As an informed, engaged, and experienced small business owner, I have examined the issues and done my research. TPP is unequivocally good for small businesses and crucial to the future stability and growth the U.S. economy. The President and U.S. Trade Representative Michael Froman are extremely focused on the needs of small businesses. In a half-day White House briefing by key senior Administration officials that I attended on March 18, 2015, the 45 small business owners there were unanimously passionate in their support of TPP. The administration and small business owners have just having a hard time organizing to vocally engage for all the reasons listed above. That needs to change, and I invite all small business owners to spread the word about the Share Trade campaign to help ensure that our voices are heard.
9. As pressing as all your immediate business problems are, you can’t afford to not think about exports. And it doesn’t have to take a lot of time. Small business advocates are working to make export data and advice more available to you. Government agencies you’ve probably never heard of are waiting to help. More work is needed to create super user-friendly and idiot-proof websites and apps for small businesses who want to export, but for now here are a few resources to get you started:
- Business Forward's Trade Resources page provides a good overview of trade policy and links to export resources
- Local and state International Trade Development Authorities such as CITD
- Export Virginia -- not just for Virginia residents, Export Virginia offers market research, Exporting 101, and organizes international trade missions that are open to all
- Local Chamber of Commerce
- Local District Export Councils
- Online resources like Export University are beginning to crop up; continuing education courses are offered at many local colleges and universities
- Shyp is an awesome new app in SF, NY, and Miami and coming to LA that will ship your international package for you and handle all the customs paperwork. Sweet!
- Etsy and other marketplaces have international shipping and export user forums
- Google and Twitter (@WSJSmallbiz, @SmallBizExpo and many others) are your friends in continuing to access free tips and new info online
Do you know of a helpful export agency or resource? Share it in the comments!
10. You’re not alone: the power and wisdom of crowds. Currently, there are 28 million small businesses in the U.S. but less than 10% -- around 300,000 small business – export. Not for long. As more and more small business owners begin to take advantage of the growing overseas opportunities by exporting and importing, we will be able to effectively crowd-source information and best practices and remove barriers, such as high outbound shipping rates and port obstructions, through our collective influence and purchasing power.