By Lesley Batchelor OBE, Institute of Export’s director general
According to the CBI, only one in five of the UK’s small and medium-sized businesses currently export, but businesses are 11% more likely to survive if they do. And the latest BIS survey of SME employers found that only 28% of SMEs surveyed felt they were strong in entering new markets.
For all the talk about Great Britain being a trading nation, we aren’t when it comes to small and medium sized enterprises (SMEs). While SME’s account for roughly 95 percent of all companies in UK, and create 65 percent of all jobs, less than 20 percent of them are involved in exporting.
When compared to U.S. SME’s at 33 percent, German firms at 20 percent and Chinese small and medium sized firms at 60 percent, it is pretty clear that British firms have not caught on to the opportunities that are available from exporting. It is also why we buy Chinese laptops, Japanese robots, South Korean smart phones and Taiwanese computer parts. Much has been written about the causes underlying our utter lack of international activity, from an unwillingness to take any kind of risk, to cost concerns, a lack of qualified international trade professionals and managers, and a general lack of market knowledge.
How difficult can it be to do an environmental scan of a country with potential on Google? Then there is the old worn out excuse of little or no government support. These may be legitimate, but in the end they are just excuses. We need to fundamentally rethink how we encourage and develop the capability of British SME’s to actively pursue international markets.
Let’s start from the top down.
1. No more government trade missions where the focus is on politicians. Trade missions should be business to business driven, with matchmaking and follow up incorporated in each mission.
2. Let’s start talking in the media and industry associations about realistic markets. India and China are not realistic markets for most SME’s unless they operate in very specific niche markets. British firms need to know more about where real opportunities and real customers are. There is a need to promote Latin and South America, East and West Europe, and the small strong markets in Asia such as Singapore, South Korea and Taiwan.
What can SME’s do?
3. Understand that we live in a competitive global world and learn about it. In a recent survey, only 28 percent of small business in Britain know how to trade internationally.
4. Be prepared to spend money and time gaining the necessary knowledge and training on international activities such as Incoterms, letters of credit, and freight forwarders. It’s not rocket science and it should be a part of every SME’s activity.
5. Understand the value of the impact of social media on your international marketing potential. While Brits have one of the highest uses of the internet on a per capita basis among OECD countries, we really need to convert that skill to trade. It’s not that difficult to set up a PayPal account, and in twenty minutes you can identify a segment of real customers using LinkedIn.
6. Understand it is not about markets; it is about reaching real customers. It doesn’t matter which country(s) you choose to sell in (except for China and India) but it does matter if they have customers. Ask your colleagues and your networks where they sell to in the world, why they have been successful, and what lessons they have learned.
7. Pick on someone your own size. Don’t go after customers in large, complicated, non-transparent markets. Choose countries that have SME’s that want to work with you.
8. Pick a country(s) that has growth potential and a need for your product or service. Don’t know where to find them? Try Google.
9. Partner up. You will need agents or distributors or local partners. Find the good ones and cherish them. They will save you time, money and headaches.
10. Get competitive. Figure out what makes you the best at what you do and build on that. By the way, it’s not because you are a British company. No one cares. Customers care about product quality, after sales service, good communications and strong supply chains.
11. Budget for market development. Nothing is free and international markets can take time to develop.
12. Commit to staying for the long term. Good customers are hard to find, and once found are worth the effort.
Something has got to give, as Einstein told us ‘You have to learn the rules of the game. And then you have to play better than anyone else’. So let us help you learn how to make the best profit on orders you win across the globe.