Hitting the government’s target of doubling UK exports to £1tn a year by 2020 will be no mean feat, if recent research that found the proportion of British businesses that export has stayed put at 50% over the last few years is anything to go by.
What’s becoming all too clear is that it won’t just be met by shipping out ever more Jaguars and Dysons. The answer lies in encouraging our wealth of small business talent to look to foreign shores - but it’s easier said than done.
Most small firms we talk to see their growth coming from within the UK, either through new customers, or through up-selling to existing ones. There’s still a limited appetite when it comes to exports. So how can the government encourage more small businesses to take the plunge when it comes to overseas markets?
Here are a few suggestions that could give small businesses the added push to go global.
1. Protect the product
Manufacturers in particular often complain about the infringement of their intellectual property overseas. It can be extremely hard and costly to protect your product or service from the greasy fingers of those wanting to steal your idea.
While Europe is setting up patent courts, outside the EU there are sizeable problems for the government to address. Assuring small firms it will do all it can to protect trademarks, patents and copyrights, and giving overseas governments the push they need to enforce those, will do much to reassure small businesses that exporting is worth looking at.?
2. Increase incentives
Let’s face it, at the moment there’s no real carrot to tempt small firms to make the move into exports. A new tax relief of 10% on export activity, based upon the value of sales made to export markets, could be just the incentive they need.
In the same vein as Research & Development relief for corporation tax, relief for export activity would aim to reduce an eligible entrepreneur’s tax bill, or provide an export activity tax credit by way of a cash sum paid by HMRC. In other words, the bigger an entrepreneur’s international sales as a proportion of the total, the less tax they will pay, creating the focus required to ensure sustainable success in exporting.
3. Get small businesses on the plane
More than three-quarters of companies that don’t export feel their business is UK-focused. Sometimes that is the case, but for others the question isn’t product, it’s appetite. Case studies of other successful businesses reaping the cash rewards of exporting may help galvanise others that don’t realise they’re missing out.
Under the coalition government there has been a greater emphasis on exports to a wider international market base. Regular trade missions hit countries across the world and, minister or cabinet-led, have been important in getting businesses exposure to foreign markets. But we still need to get more small businesses involved. Show a business what market opportunities there are and they’ll get out there and start making contacts.
4. Cut red tape
It’s boring, but it can’t be ignored. One of our members faces a nine month wait for a gin license to be granted. Another cites the Account Consignor Scheme. It’s a perfectly justified air cargo safety regulation, designed to ensure no bombs find their way into freight, but one which imposed a whole heap of additional requirements on the business, with no recognition of the costs involved. Regulation must be proportionate.
5. Unleash the marketers
Whitehall has been undergoing a much publicised marketing freeze to help balance the nation’s books. All campaigns now need central sign off for the government to dig into their coffers. However, there’s no point designing and implementing forms of support if no one knows about them. There are concerns that one recent scheme was scrapped because of low take up - not surprising given the lack of marketing to promote it.
So get the Whitehall wallet out and start advertising – not just the services but those that provide them, from UKTI down. This should also involve reviewing the routes to reaching small businesses, which at present don’t seem to be working as well as they should.
Phil Orford is chief executive of the Forum of Private Business, a group representing small businesses across the UK.