You’ve cracked the UK market but there’s a whole world of new customers out there, so here’s our guide to exporting as a small business.
Have you ever thought about exporting your goods or services abroad? There’s a huge potential for growth there, but many businesses find it a daunting experience.
But help is on the way. The government have outlined ambitions to support an additional 100,000 companies to be exporting by 2020. And it’s working. From May to June 2017, exports from the UK grew 0.9% to £49.7 billion.
It would be impossible to talk about exports without mentioning Brexit. The sterling has fallen significantly, which means UK goods are more competitive overseas, presenting an unexpected opportunity to think about exporting. The number of businesses reporting improved export sales increased in the first quarter of 2017, with businesses in both manufacturing and services saying they’re more confident that their turnover and profitability would increase during the following year.
How SMEs export today
The Federation of Small Businesses (FSB) identified that there are three main types of exporters amongst UK SMEs:
This group tends to factor in exports into their business strategy, with identified destinations and specific target markets. Exporting isn’t an option for them, it’s a necessity.
Businesses that fall into this group didn’t necessarily plan to export from the offset but they respond to opportunities and make the most of them, leading to a presence abroad.
These businesses will invest after being approached by foreign customers via digital platforms – they don’t have a plan to target a specific area but will happily do business with anyone who asks.
Whatever group you fall into, it’s important to evaluate your business objectives and balance them with the right opportunities. To make the most of your growth potential it’s beneficial to look beyond the UK for success. Businesses who actively sought out new markets unsurprisingly reported access to more customers, increased turnover and increased profitability. They also reported improved reputation, credibility and a raised profile.
What this means is that everything you’re doing successfully in the UK can be replicated to a significantly larger audience outside of country. Currently, the largest export market for small businesses in the UK is the EEA, which accounts for 93%.
Ecommerce is also another growth area, opening up a lot of new export opportunities for SMEs, in both developed and emerging markets. A key point to think about is that the top export markets for SMEs are the biggest growing e-commerce markets globally.
Why aren’t more SMEs exporting?
Just 21% of UK small businesses currently export. And of the small businesses who currently export, it’s predominantly start-ups less than four years of age who are leading the way.
So, what about the other 79%? What’s stopping them from selling abroad? Well, the lack of capacity, resources and time required to invest in exporting is a large part of it. When you have a small team, making changes to your production processes and supply chains can feel like an extra, unnecessary step since there won’t be an immediate pay off.
Another issue with exporting is attitude. As mentioned earlier, many businesses just don’t consider themselves candidates for export. It’s not that exporting has been discounted – it’s just never been considered in the first place – just 1/5 of UK SME businesses currently export.
Similarly, many small businesses don’t understand the potential their business has. Your product, whether it’s a service or something physical, will be able to find an audience elsewhere.
The FSB export report stated that the following challenges were key in stopping small businesses expanding abroad:
• Finding customers and identifying marketing strategies for new markets to promote products
• Foreign exchange rates hamper appetite to look overseas
• Fear of local competition
Finding help and support
Expanding your business in new ways always holds a certain level of risk. But with research, planning and the expert advice you’ll be better placed to mitigate the risks associated with expansion of growth.
Research shows that the most used sources of information are government institutions (37%), informal advice and support internally (11%) or go online to find support (7%). Sometimes it can seem like most of the advice out there is aimed at helping large companies export their products, but start-ups, especially those that are tech-based, are changing the perception of what success looks like. Your company might have only five employees but your product could be used by millions.
So, you want to export, what next?
The British Chambers will examine your business, looking at your products and services, and help decide whether you’re ready to export. They also factor in your business infrastructure – you might have the ambition to export but are you in a position to scale and grow? They might raise questions about your technology and whether it can take the extra requirement of exporting. More indepth reviews will also run through intellectual property risks, how well your branding and packaging will do in new markets, price points and other essentials.
In addition to assessment tools, the chamber also provides market insights in their market Seminars, plus partners with Experian to create market overviews.
UK Trade and Investment (UKTI) is an incredibly popular resource for small businesses looking to grow:
• UKTI’s Passport to Export Service assesses a company’s readiness for international business, and helps it build international trade capacity.
• Gateway to Global Growth is a UKTI service which helps exporters diversify into new markets.
• The Export Marketing Research Scheme (EMRS) helps you reach sound decisions when approaching a new overseas market.
• The Export Communications Review (ECR) provides companies with impartial and objective advice on language and cultural issues to help them improve their competitiveness in existing and future export markets.
Build your business network
There are regular trade shows and events which give you the opportunity to speak to experts, join seminars and practical workshops, and attract prospective customers. Face-to-face networking and peer-to-peer advice can provide the insights and inspiration you need to get involved in the export business – after all, who knows better about the journey of small businesses than one which has been there and done that?
The UKTI’s Tradeshow Access Programme even offers up grants to support eligible SMEs in attending trade shows abroad. The Chamber network runs hundreds of similar international trade events throughout the year.
A significant number of exporters sell their products abroad through a distributor and/or a local agent, so trade shows can be a great way to meet these people. Having someone on the ground in your new target market can be a lifesaver when it comes to negotiating contracts or using established trade connections in the local market.
Funding your growth
UKEF UK Export Finance (UKEF), the UK’s export credit agency helps many businesses access financial help through highstreet banks.
• UKEF will partner with five of the UK’s biggest banks to deliver government-backed financial support to exporters more quickly and efficiently.
• UKEF will also be able to extend its support to supply chain companies of UK exporters, significantly increasing the number of businesses able to access UKEF-backed trade finance.
• As a result, smaller companies that support big UK exporters will be able to secure government-backed financing to deliver products and services and benefit from their clients’ international business.
• UKEF has provided £14 billion in support for UK exports and in the 2016/17 financial year, nearly 80% was for SMEs.
Making any change to your business requires a lot of planning and a certain amount of bravery. But once you’ve done the groundwork and established yourself in the UK, it could be time to take your product to a wider audience and grow your customers and your profits.