Exports and Sales: What SMEs Should Watch for in New Markets

Is exporting worth it for a mid-sized business?

An inquiry from Austria, then one from the Netherlands, finally a dealer from Poland interested in representing you. Many businesses slip into exporting this way without having planned it. That works as long as it stays at individual orders. As soon as a foreign market is meant to carry a noticeable share of revenue, it needs its own sales decision.

The opportunities are real. A second or third market spreads risk when domestic business weakens and can smooth capacity utilization. So are the risks: payment defaults, unfamiliar rules, exchange rates, longer routes, and a sales operation that is far away. Whether exporting pays off is therefore decided less by the market than by how you enter it. This piece asks: how does a mid-sized business enter a foreign market so that exporting becomes predictable and the risks stay manageable? To answer it, we first look at figures on exports by mid-sized companies and at the target markets, then at the hurdles of market entry, and finally at the step ladder, market selection, rules, and how to organize sales.

Exporting is not a question of the world map but of sales capacity. A market nobody looks after is a place where you happen to sell something.

How do German SMEs export today?

The Institute for SME Research (IfM) Bonn regularly analyzes official foreign trade statistics by company size. For 2024, it reported in August 2026:

According to the IfM, small and mid-sized companies account for less than 20 percent of total German goods exports. Most exports therefore come from large companies. For smaller businesses, the EU single market with its largely harmonized rules is the most important foreign market. The IfM stresses that it offers legal certainty and reliable conditions, which matters more as global risks grow.

Which target markets are gaining and which are losing?

For total exports, Germany's Federal Statistical Office reported goods exports of 1,563.0 billion euros for 2025, 0.9 percent more than the previous year. Behind this stability lie marked shifts between destination countries.

The US remained the most important export destination, but exports there fell by 9.4 percent. Exports to China also dropped by 9.7 percent. France and the Netherlands, by contrast, grew. In terms of total trade volume, imports plus exports, China was once again Germany's most important trading partner in 2025.

For choosing a new market this means: large, distant markets tempt with volume but react more strongly to tariffs and political tensions. The article Geopolitics as a business risk describes how such risks reach a business through supply chains and sales markets.

What makes entering a new market so hard?

Research speaks of the liability of outsidership. A supplier from abroad has no established relationships in the target market: no customers to recommend it, no partners who know it, no knowledge of local practices. In B2B, where orders come through trust and referrals, this weighs heavily.

Hunt, Hayward, Song, Townsend, and Stallkamp (2023) studied how small exporters overcome this disadvantage. They analyzed around 88,000 export transactions by 1,040 small lumber exporters from 52 countries and supplemented the data with interviews. The focus was on the payment terms exporters grant their customers, from prepayment to long credit periods.

• Generous payment terms open doors. Exporters with riskier payment terms generated more revenue per market entered. Part of this effect ran through referrals: satisfied customers brought further customers.
• Too much risk does long-term damage. Overly risky payment terms were associated with lower profitability and poorer survival chances.
• Small exporters fear defaults. The authors cite a survey in which 80 percent of small exporters named customer non-payment as their main concern. Newcomers also have few means to enforce claims abroad.

The study concerns a single industry with fairly interchangeable products. But every exporter knows the tension it describes: if you are too cautious, you won't get into the market. If you are too generous, you finance your customers and carry their risk.

The export ladder: how do you enter step by step?

In a literature review, Alinasab and Hunt (2025) describe how small companies with limited resources manage the uncertainty of a new market: through staged, incremental commitments in which each step creates an option on the next without risking everything at once. I translate this idea into a ladder with three steps and clear checkpoints.

1. Step 1: Serve inquiries professionally

   Answer inquiries from abroad quickly and in the customer's language, with clear delivery terms, prices in a fixed currency, and payment terms that limit your risk. Record which countries inquiries come from.

2. Checkpoint 1

   Do suitable inquiries keep coming from one country? Can the orders be delivered and invoiced with reasonable effort? Only then is the next step worthwhile.

3. Step 2: Develop a test market with a partner

   Choose one market and work with a local partner, such as a dealer, an agent, or a cooperation partner. Set a budget and a period of twelve to eighteen months.

4. Checkpoint 2

   Does the market reach the agreed target for revenue and contribution margin? Do customers pay on time? Does the cooperation with the partner work? If not, end the test deliberately.

5. Step 3: Build your own sales presence

   Only when the market carries itself are your own staff or a local branch worthwhile. Now the rules for building a sales team apply, just with additional questions on law, taxes, and language.

How do you choose the right market?

The first export market should not be the largest but the one where you have the best chance to learn without losing much. A simple profile helps compare candidates. The scores are a worked example for a manufacturer of special machinery.

In this worked example, the smallest market wins because it is the easiest to work. This is not an argument against large markets but one for sequencing. In case studies of 30 market entries by five small Australian technology firms, Chetty, Karami, and Martín (2018) show that knowledge, networks, and capabilities from one market entry open up new opportunities for the next. If you learn in the first market, you choose the second one better.

It also matters whom you want to reach there. A market is only good if it has enough customers who match your ideal customer. The guide Defining target customers shows how to describe them. How market choice fits into a sales strategy is covered in Developing a sales strategy.

Which rules and risks do you need to know?

With the first foreign order come topics that play no role in domestic business. The following list is an overview and does not replace advice.

• Customs and origin: Outside the EU, customs formalities apply. Clarify who bears customs duties and import charges, and agree on this in the delivery terms.
• Sanctions and export controls: Before every deal, check whether the country, customer, or goods are subject to restrictions. In Germany, the Federal Office for Economic Affairs and Export Control (BAFA) is responsible for export controls.
• VAT: Deliveries abroad follow their own rules. Germany's e-invoicing mandate applies to domestic supplies; other countries have their own requirements, as the article E-invoicing mandate explains.
• Payment and currency: Decide which currency you invoice in and protect yourself against non-payment, for example with prepayment, a letter of credit, or credit insurance. For larger deals, government export credit guarantees are available.
• Vet partners: Check dealers and agents thoroughly before signing, as the guide Due diligence on business partners describes.
• Contracts: Distribution and commercial agency agreements with partners abroad belong in the hands of a specialist lawyer, especially regarding exclusivity, termination, and compensation claims.

How do you organize sales for the new market?

The most common mistake is not the wrong market but a market without clear responsibility. If exporting runs on the side, it gets whatever attention is left over, and in day-to-day business that is little.

For many businesses, trade fairs are the first step to meeting partners and customers in a new market. The guide Trade fairs and events describes how to turn booth conversations into orders. And make sure a single large foreign customer does not carry too much revenue. Why that is dangerous is covered in Concentration risk.

What you can do this week

Before deciding on new markets, get an overview of what is already there. It often points to the next market more clearly than any study.

• List all inquiries and orders from abroad over the last two years by country.
• For each country, note revenue, contribution margin, and effort, and whether payment was on time.
• Fill in the market profile for the two most promising countries.
• Review your current payment terms for foreign customers and set a cap on open receivables per customer.
• Ask your Chamber of Industry and Commerce or Germany Trade & Invest for information on your target market.
• Name one person responsible for exports and give them a fixed share of their time.

The answer to the question we started with is therefore: exporting pays off for a mid-sized business when it enters step by step, starts with a market where it can learn without losing much, and assigns time and responsibility to that market. Whether a market holds up is shown by contribution margin and payment discipline, not by the number of inquiries.