By Lucy Fox, General Manager, UK Cloud Solutions at Exact
The Great British Export Report released in July found that three quarters of UK small and medium businesses (SMEs) are not exporting. Given the benefits it can have for SMEs, why are more businesses not taking the leap and exporting their products and services? With a bit of forward planning, SMEs that are in a position to export can start to see these benefits.
Our recent survey asked SMEs about their exporting activities. Those SMEs that did export found it to be a successful source of revenue. In fact, for one fifth of SMEs, exporting is now the biggest growth area of their business.
Interestingly, planning an exporting strategy may have helped to contribute to the success of the SMEs who did export. Of the SMEs we asked who had seen their exports grow last year, nearly three quarters had a business plan in place. Of these SMEs, 85% said increasing exports had been part of their strategy.
Despite the potential revenue, many companies still aren’t exporting their goods and services. So, why not? Often companies are worried about investing in fast growing, but less developed markets. Talk of bubbles and delicate emerging markets could be enough to put off some SME owners. The benefits might outweigh the risks, with the British Chambers of Commerce claiming BRIC countries (Brazil, Russia, India and China) have potential to provide the best growth for businesses in the next twelve months.
Some SMEs may be put off by cultural and language barriers but small companies are more likely to worry about the regulations or tariffs imposed by the country they are exporting to. The World Trade Organization is actively seeking to remove these tariffs.
Preparing for these barriers could be the best way to overcome them. Researching target markets will show up any barriers that are in place, and SMEs can then plan how to overcome them, and plan how best to use the help that is available.
Despite potential regulations and tariffs, research has shown that SMEs who export are more successful than those who don’t. The UK Trade and Investment (UKTI) found that SMEs who export are 11 per cent more likely to survive than those who don’t. Given that one in three start-ups fails in the first three years of business, exporting could be a helpful source of income.
Before any business jumps into a foreign market, however, it’s important to know what is involved. Different countries will have different rules surrounding duty, product labelling and quarantine. Exporters might need to pay VAT or have a licence to export. If this isn’t enough to worry about, will there be a market for a particular product or service in the target country?
The best way to overcome these barriers is to plan for them. Planning an export strategy could be the right thing for your business. One thing to remember is that exporting can be very lucrative for SMEs and it could be worth taking the well planned and researched leap into foreign markets.