By Paul Evans, area director SME Banking in Central London, Lloyds Bank Commercial Banking
The past few months have been particularly encouraging for the UK economy. GDP has continued to increase, unemployment levels are falling and the number of self-employed workers is on the rise, signalling a boost in start-up enterprises.
We also know that many business leaders are feeling increasingly confident about the future and have strong intentions to grow and invest in their firms throughout the remainder of the year. Indeed, the most recent Lloyds Bank Business Britain report revealed that the overall UK confidence level has soared to the highest point recorded in the survey’s 22 year history.
What’s really interesting is that business optimism is not just limited to domestic markets. A significant proportion of the business owners we spoke to revealed they have high hopes for exporting, despite increases in sterling against the currencies of the UK’s main trading partners.
In fact, out of the 1,500 SME businesses surveyed, half of them said they expect to increase their exports over the next six months, particularly across Europe, the US, Canada and Asia — compared to just six per cent that anticipate a drop. These findings indicate exporting will be a key area of growth for many firms moving forward, and for those not already doing so, an important method of expansion to consider.
So what is the business case?
There’s an endless list of reasons why exporting is a great move for SMEs.
In short, the UK is home to an increasingly strong domestic market, but when compared to just Europe alone, it is still relatively small — so there is a significant opportunity for firms to expand their operations by tapping into a huge international market that is right on our doorstep.
Furthermore, exporting means business owners don’t need to have all their eggs in one basket. Trading abroad means that firms are no longer relying solely on their home markets, meaning they are instantly in a stronger position should that market start to stall here in the UK. Firms that have diversified into other countries might find that a dip in UK activity is off-set by stronger trading in overseas markets, thus making it much easier to weather the storm.
Of course, there is no getting away from the fact that companies always face an element of risk when they decide to start trading internationally, and smaller businesses, without considerable in-house resources, may feel particularly exposed. However, there are a wide range of support services available to businesses looking to export: banks, UKTI and the British Chamber of Commerce specialise in supporting overseas trade, so business leaders can easily access multiple resources to help ease the process.
So why now?
In summary, given that domestic markets are growing stronger by the day, there are endless advantages to overseas trading, and the confidence needed to make the move is present amongst business owners: now is an ideal time to make exporting plans a reality.
Ambitious businesses should start exploring their options, identifying opportunities in potential new markets, and utilising the support out there so they are in the best position possible to capitalise on this buoyancy.