The UK has a huge opportunity to double the number the number of small businesses exporting their goods and services, according to the Federation of Small Businesses (FSB).
In a new report 'Destination Export: The small business export landscape', found that 21% of small businesses not currently exporting would consider doing so. That figure matches the number currently exporting, representing the opportunity to double the number of small firms trading overseas.
In order to tap into this potential, the FSB said the government, private sector, finance industry and business associations including FSB, must now focus on providing effective targeted and tailored support.
The most common challenge facing small firms in exporting is finding customers, followed by marketing their product to overseas customers. For those currently exporting the most common challenge remains foreign exchange rates. While for potential exporters, there is a pervasive knowledge gap to overcome – one in five small firms that would consider exporting do not know where to go for support.
This report also found there are issues around confidence in trading overseas and an assumption by some small firms that exporting is not for them. Yet there are clear benefits with the average annual turnover of an exporter (£935,921) more than double that of a non-exporter (£390,028).
Martin McTague, the FSB's national policy director, said: "Small businesses that export are more likely to survive, grow and innovate. But in addition to more traditional barriers such as language and foreign exchange, businesses are having to deal with a rapidly changing export landscape and the advantage and challenges brought about by e-commerce. Any support must be designed with this in mind and should be able to cater to a wide range of export needs, both for those currently exporting and for those considering doing so.
“The Government clearly understands the need to promote exporting given the decision in late 2015 to refocus UKTI’s role and make exports a priority across government departments. Small businesses are well placed to make a significant contribution to the Government target to increase the value of exports to £1 trillion and support 100,000 new exporters by 2020. But the fact remains, many small businesses aren’t aware of the support available or how to access it. This report provides some critical insight into the kind of support small firms need at different points along their export journey and provides key recommendations on how close the gap between demand and delivery.”
The FSB said that given the UK's decision to leave the EU, the report could not have been published at a more uncertain time, particularly for international trade. Maintaining a stable and secure trading environment for small businesses must now be the priority.
The EU is by far the dominant export destination for small businesses with 93% of exporters selling to countries within that trading bloc. But the report does point to signs that newer entrants to the export market are attracted to a more diverse range of destinations, especially emerging markets in Asia and the Middle East. Those offering support must seize this opportunity boost this trend and diversify the export market further by helping to provide market knowledge and practical information on logistics, delivery and translation services.
Current government-backed support, particularly UK Trade & Investment (UKTI) services, have made some headway with exporters. The FSB's showed that of those who accessed export support, over a third (37%) used support provided by government. But this report recommends one key way for UKTI to help maximise the chance of exporters getting approached by customers overseas. It's 'Exporting is Great' website allows UK businesses to search for export opportunities but there is potential to create an online platform allowing businesses to show their wares to overseas markets and increase their visibility.