By Claire West
If more of its members took the plunge to export for the first time, £792 million could be added to the economy annually according to a new report from the Federation of Small Businesses (FSB).
New FSB research shows that six per cent of its members that don’t currently export say they would like to in the future. By doing so, they could generate millions in additional economic activity. In addition it would help the Government meet its ambitious targets to get 100,000 new businesses exporting by 2020, potentially adding £5.6 billion to the economy at the same time.
The Government is relying on UKTI to support these new exporters to export for the first time. The research also shows that since 2010, awareness of UKTI has increased among FSB members that export from 37 per cent in 2010 to 49 per cent in 2012. While this is an improvement, the FSB believes that more can be done to promote UKTI services. It is disappointing that only one in five businesses have used UKTI services and the FSB is encouraging more firms to engage with the support available.
The report Enabling small businesses in the drive for exports highlights the perception of small firms that UKTI support is just for big businesses. The FSB believes in order to get more small firms exporting for the first time, UKTI should raise awareness of the support available for small firms. Moreover its programmes such as the Tradeshow Access Programme and the Overseas Market Introduction Service should help small firms build networks to generate real quality leads.
With 88 per cent of firms still reliant on exporting to the eurozone, the FSB wants to see support across all countries given the importance of the EU Single market, as well as other markets including the emerging countries.
FSB members that currently export highlight access to finance (23%) and fluctuating exchange rates (35%) as challenges to exporting. As a result the FSB wants to see a referral mechanism developed so that the high street banks refer more businesses to UK Export Finance (UKEF). Additionally, consistency is needed in communication by UKEF to make more small firms aware of the support it provides.
The FSB has called on the Government to look at how export support is delivered in other countries and to look at the Small Business Administration in operation in the USA. The business group believes that such a scheme should be replicated in the UK, with a UK Small Business Exports Department, which would provide tailored support to small firms and be delivered through the Business Bank.
Launching the report at an event for small businesses in London — also attended by Chuka Umunna, Shadow Business Secretary and the Trade Minister, Lord Green — Mike Cherry,
National Policy Chairman, Federation of Small Businesses, said:
“UKTI has clearly listened to the concerns raised by small firms and offers much wider support and advice to small businesses. Given the export growth potential among the smallest businesses they just need a helping hand to get on the way and be made more aware about the help that is out there for them and that it isn’t just for big businesses.
“Small firms remain a key part of the drive to increase the number of exporters. Our members alone that want to export could make a huge economic contribution. However they do face barriers to taking that first step. By looking at what works well in other countries, such as a one-stop-shop for help and advice, the Government and UKTI can make the right support available to give more small firms the confidence to take the plunge and export for the first time.”
Other recommendations include:
• Offering export vouchers as an incentive to new exporters which they can exchange for support from UKTI or other private sector export support providers. The FSB is concerned that the £6.5 million voucher scheme announced at the 2012 Autumn Statement will not incentivise new exporters to come forward. If successful the scheme needs to be expanded with more funds made available.
• Improving the consistency of UKTI support across the regions to ensure they are focused on delivering the needs of businesses rather than the targets of commercial organisations.
• A proactive approach from UKTI to mapping supply chains to find new potential exporters.
• Replicating good practice examples of pre-export support from other European countries in the UK.
• Developing the role of Local Enterprise
Partnerships to identify potential exporters signposting them to advice and support from UKTI.
Lord Green is focused on increasing exporting opportunities for UK businesses, commenting on the report he said:
“The Government has set ambitious export targets over the next seven years and it’s vital that small businesses see the potential of trading overseas to generate growth and jobs. With the help of the Federation of Small Businesses the Government would like to see a stronger take-up from its members and the wider SME community to reach its goal and boost the UK economy.”
Commenting, Shadow Business Secretary Chuka Umunna MP said:
“So that the UK can better compete and pay its way in the world, we need to do all we can to help businesses - in particular smaller firms - export. The world’s emerging economies offer huge opportunities for Britain.
“This striking and valuable new research from the FSB highlights the huge potential economic benefits which could be generated if more small businesses were able to export for the first time. It also highlights the challenges facing small firms: the fact that only one in five of FSB members surveyed have used UKTI’s services shows how much more work there is to do to within Government.
“A lack of access to export finance remains a significant barrier to smaller firms exporting which is why we’ve argued for a British Investment Bank to help address small businesses’ finance needs.
“I welcome the FSB’s call for the Government to look again at export support for small firms and in particular at the example of the US Small Business Administration — I have already said I think there is a strong argument for the establishment of Small Business Administration for the UK.”