By Marcus Leach
2012 will be a year of great opportunity for the UK’s exporters and importers, despite the bleak outlook for the UK economy, according to foreign exchange provider Global Reach Partners.
Stewart Blake CEO of Global Reach Partners, which helps hundreds of British businesses trade internationally, says there is plenty of hope for success.
“There is a lot of opportunity for success in 2012 for small and mid-sized businesses through international trade, as long as they take precautions against the wider financial problems," he said.
“For instance, the Government recently announced that it will be pledging £95million to Britain’s SMEs, to ‘unlock the UK’s exporting potential’. Another opportunity this year is the Olympics. It will mean lots of overseas business people will be coming to Britain to watch it: so I would urge businesses to arrange meetings with them to generate sales and meet with potential new suppliers.”
Foreign trade can appear costly and risky to businesses that have not done it before. One of the main risks, and one that is often overlooked, revolves around currency movements. In the current environment, currencies may change suddenly in value, having an impact on the business and its profits.
The economic climate and downturns of the last three years has meant that small to medium sized enterprises (SMEs) have had to be proactive and take measures to protect their businesses in different ways. Exporters need be particularly careful if their profitability is tied to the exchange rate, they must make sure they have a plan to protect this budgeted rate.
Hedging against currency fluctuations is one way to do this, but risk can also be reduced through good financial housekeeping, such as tight budgeting and forecasting. For example, if both your suppliers and customers use the same currency, the risks associated with exchange rates in balancing payments is greatly reduced.
“Take advantage of better prices from your existing trading partners, but also be prepared to look further afield for better deals," Stewart Blake added.
"The most important thing for SMEs is to continue to have a global view. For instance, the Euro is weakening so suppliers from here will start to become cheaper — good news for importers of, say French produce, but bad news for British firms with European competitors.
“But the big opportunities come from the scores of emerging markets in Africa, Asia and South America — many of these are growing strongly and are hungry for the high-quality manufactures and know-how that Britain’s small and mid-sized businesses have to offer.”
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