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A Profile of Small and Medium-Sized Exporters (SMXs)
in British Columbia - 2002
Small Business Exporters
Starting in 2000, there is data available on breakdowns of exporting establishments by number of employees. This data makes it possible to examine exporters not only by size of exports as has been done in the previous sections of this report, but also by employee size.
One commonly used definition of a small business is an enterprise that employs less than 50 people. In British Columbia, in 2000, there were 3,928 small businesses that exported goods. These businesses represented 77% of all exporters in the province and comprised just over 1% of all small businesses in British Columbia. The reason such a small percentage of all small businesses represents such a large proportion of exporters is that small businesses make up almost 98% of all businesses in the province. Consequently, since the great majority of businesses in British Columbia employ less than 50 people, it follows that most companies that export will also be in this category.
Number of Exporters by Employee Size,
Source: Statistics Canada |
However, the chances of a business being an exporter are greater the more people it employs. The remaining 1,175 exporters (i.e., those having 50 or more employees) encompassed 16% of all large businesses in the province. Of those establishments employing over 100 employees, almost 20% were exporters.
Small business exporters shipped approximately $11.3 billion worth of goods in 2000. This represented only 34% of all British Columbia exports, despite the fact that small businesses made up 77% of all exporters. Businesses with 250 or more employees comprised just over 3% of all exporters, but shipped 33% of goods exported. The other third of exports were shipped by businesses with between 50 and 249 employees, which make up fewer than 20% of all exporters.
Value of Exports from British Columbia
Source: Statistics Canada |
One reason for this export bias toward larger companies is that there are certain barriers to shipping to international destinations, the most significant of which is probably the cost. In addition to transportation expenses, there is also the cost of marketing. Larger companies are more likely to have the resources to take on these expenses. Also, smaller businesses are more likely to serve niche markets and have a less diversified product mix; therefore, they are apt to ship smaller volumes of goods since their client base is smaller. Finally, as exports increase, profits tend to follow and eventually businesses that export more tend to grow in terms of employees as well. In other words, small businesses that export are more likely to become large businesses.
As access to the Internet expands and E-business proliferates, some of the disadvantages experienced by smaller businesses may diminish and the incidence of small businesses that export may increase. Marketing on the Internet can be far cheaper than traditional forms of advertising and businesses offering a unique product will have a much larger customer base from which to draw making production of niche commodities more viable.