In the latest Bibby Blog, Phil Tobin discusses Liam Fox’s comments on exporting, recent Royal Mail research on international trade and the support services available to SMEs looking to take business over borders.
The move from domestic trade to exporting overseas is often considered as pivotal for the growth and development of small businesses. Accessing new markets offers huge opportunities for SMEs, yet the majority of small businesses are yet to take this road to growth. Just last week, Britain’s trade secretary, Dr Liam Fox urged SMEs to “stop thinking about exporting as an opportunity and start thinking about it as a duty.”
Earlier this month, to coincide with Small Business Advice Week, the Royal Mail released research which provided insight into the number of UK SMEs operating in multiple countries.
The research found that over half (60%) are not exporting overseas, resulting in them missing-out on potential revenue streams from new markets. The reasons why? Over a quarter (26%) said the cost and complexity of managing customs was the main reason they do not export. A lack of knowledge of foreign markets (21%) and language barriers (21%) were also cited as key concerns holding business owners back.
Despite this hesitance, there is a growing desire among SMEs to take their business overseas. Bibby Financial Services’ SME Confidence Tracker in Q2 found the number of businesses looking to invest in exporting is the highest since the Tracker began back in 2014. In fact, 14% of SMEs invested in overseas trade in Q2 – more than double that in Q1 2014 (6%).
The reality is that SMEs need not struggle when it comes to considering how to enter overseas markets as there are a range of support mechanisms available to help tackle customs, language and market-knowledge barriers.
Guidance on how to overcome these key concerns for SMEs is available from both private and public sector organisations, including the Institute of Export, the British Chambers of Commerce, UKEF and the newly rebranded Department for International Trade.
In addition to the technical know-how, operating in more than one market demands an adaptable approach to cashflow and there are now a raft of alternative finance providers that offer specialist funding for businesses trading overseas.
At BFS, we’ve provided Export Finance, supporting our clients’ international growth for more than 15 years. Last year we bolstered our support for exporters further with the launch of Bibby Foreign Exchange, which combines our trade and export finance capabilities with payment services, enabling businesses to transact in a currency of their choice.
An increasing number of SMEs need to protect their trading activities by forward booking currency rates to mitigate uncertainty and volatility. We also recognise that business owners like certainty and that’s why we also make sure that SMEs can shield themselves against the effects of bad debt, a factor they can’t always control.
Irrespective of external factors, such as the EU Referendum or subsequent exchange rate fluctuations, businesses often see neighbouring countries as the best opportunity for trade. However, there are opportunities further afield and Royal Mail’s research found that 10% of UK SMEs who trade within the EU are now looking for opportunities to sell to customers outside of the EU.
Developments in technology, transport and business finance are all helping to make exporting a reality for SMEs throughout the UK. Businesses that are able to take advantage of this support will position themselves for growth in the long term and enable the UK to return to being “the free trading nation that it once was”, in the words of Dr Liam Fox.