Expand your reach
Trading in overseas markets can help you grow
Exporting and importing can be a great way to grow your business. The fall of the pound in recent months is particularly good news for exporters. Yet Britain’s SMEs are missing out on earning hundreds of billions of pounds from exports each year, according to a recent analysis that highlighted firms’ worries about exporting after Brexit.
Yes, the UK is one of Europe’s best exporters, but that’s due mainly to the success of its larger companies, claimed the Centre for Economics and Business Research (CEBR) consultancy*, which found that less than a fifth of the UK’s SMEs were selling their goods and services overseas, compared with two-fifths of big businesses in the UK. If that proportion of SMEs entering new markets could be boosted to 40%, it would reap £141.3bn a year in overseas sales, the analysis claimed.
Trading abroad can boost your profile and credibility as well as bottom line. International markets offer access to new customers and revenue, but also to ideas. They help to spread business risk, increase the lifespan of an SME’s products and services, and secure economies of scale not possible at home. If your business is succeeding in the UK, then it probably can prosper overseas too.
Of course, expanding into global markets can be a daunting proposition for a small business. Exporting can entail significant expense and risk. And having a sizeable domestic market also convinces many that they don’t need to try exporting.
Yet developments in technology and transportation mean the opportunities that exist for entrepreneurs are now global from the get-go. According to the SME Pulse** by Oxford Economics in association with American Express, small businesses favour two strategies to grow international trade: participating in online trading platforms and gaining good market intelligence about new markets.
The prospect of new trade deals opening up emerging markets around the world make exporting an even more appealing prospect. After the Brexit vote, the UK Trade & Investment department was replaced with the Department of International Trade (DIT), with a focus on negotiating free trade agreements. Its new portal offers country guides for ‘priority markets’ – India, China, Germany and the US. This online portal is part of a push to get 10,000 more UK businesses exporting by 2020. Will yours be one of them?
Importing: plenty to gain
There’s no doubt that the fall in sterling has made life tougher for importers: a survey by the British Chambers of Commerce† found more than half of SMEs reporting a negative impact on their profitability.
However, for some SMEs, importing remains an attractive option for opening new domestic markets, offering new products or services, or reducing their manufacturing cost. And for those that already import, it may be time to seize the opportunity to research the market again for lower-priced supplies that will regain them a competitive edge.
*Thinking Global report, October 2016, surveyed more than 1,000 SMEs
**Oxford Economics interviewed 300 UK SMEs in October and November 2016
†BCC International Trade Survey, January 2017, surveyed 1,500 SMEs