President-Elect Obama has rightly focused on recovery for small business (see: this PDF). As Obama points out, 99% of U.S. employers ARE small businesses, which create more than half of all private-sector jobs and most new-job growth. They, not big multi-nationals (MNCs) will power recovery. Obama's plan is a great start on many key concerns for small business, from affordable healthcare to access to capital. But the plan should also help small business reach overseas - not as mini-MNCs, but as effective competitors in a business environment that increasingly simply IS global.
The global economy can help streamline all elements of the supply chain, creating profitable returns for small businesses that work creatively across markets. Two good models of success include two sophisticated medical device companies, Zibra Corporation and BioVision Technologies. Each creates good jobs for 15-20 Americans and generates several million in annual sales. Obama should help others follow, in three key areas: appropriate global sourcing, niche-market overseas sales, and the cross-fertilization that comes from global teamwork.
(Zibra) designs and manufactures market-leading industrial borescopes for non-destructive testing (NDT) at extremely small diameters, outperforming giants like Olympus and Storz in this niche. From aviation and nuclear power to security and pharmaceuticals, industries needing clear views into really small places turn to Zibra. Zibra's Massachusetts factory does fast-turnaround, just-in-time custom manufacturing. But as some products became standardized they needed to expand basic manufacturing at reasonable cost, so they turned to China.
Effectively managing global outsourcing is beyond the scope of this article, though the watchwords are clearly QC (quality control), QC, and QC, including choosing partners wisely. Outsourcing isn't always the answer, but sourcing components from whom ever makes them cheaply and well makes smart business sense, with returns that benefit U.S. shareholders, consumers, and yes, workers by focusing the US economy on high-value products where we can compete. Today, little Zibra sources selectively from China, Japan, Germany, Switzerland, and several other U.S. businesses; global interconnectedness helps even the smallest business succeed.
This success can multiply by expanding and selling into other targeted markets - many times due to cross-fertilization with multiple global partners.
Similar dynamics show in the successes of BioVision, which designs and manufacturers integrated "non-surgical endoscopy" systems offering true endoscopy at diameters smaller than many hypodermic needles, combined with the SurgViewÔ, an endoscope tower the size and heft of a generous lunchbox. BioVision systems, in the niche market of micro-endoscopy, outperform competitors in compact portability, flexibility, image clarity, and cost, and already reduce pain and speed healing for patients in joint, spinal, and cardiac applications, with more underway. And again, success stems in part from creative global outreach. This includes U.S. collaboration (BioVision scopes license Zibra technology for medical applications), and also global outsourcing of standard components. And once again, the key to successful outsourcing is selectivity. BioVision's Colorado factory handles customized, rapid turnaround, and prototype orders, and manages QC over the imports.
Global cross-fertilization is also expanding BioVision with both new product ideas (low-cost applications for emerging markets) and new marketing channels. Together with Zibra, BioVision is planning an Asia marketing organization based in China.
Many other stories could be told. The bottom line: business growth in globalizing markets requires global thinking. To really help jump-start small business, Obama's plan should include:
* Expanding the SBA's role in encouraging exports and global expansion
* Negotiating discounted small-business-member rates with associations that focus on emerging markets (Zibra and BioVision both made their China connections via a consultant with links to the US-China Business Council)
* Focusing diplomacy on issues of concern to small business, including fair trade
* Strengthening global focus in US education
Small businesses, in the meantime, should review their own potential for appropriate outsourcing, niche markets overseas, and the cross-fertilization that often links the two. This is the best way to ensure healthy growth in small businesses, the most flexible and innovative part of our economy, and thus the key to job growth and other forms of recovery.