With Export Week drawing to a close at the end of November, now is a good time to reflect on where our small businesses fit within the picture of international business expansion. While our medium-sized businesses continue to grow abroad, our small businesses appear to be struggling.
Our latest SME Confidence Tracker found that only one in ten small business owners export, whilst our joint survey with the Daily Telegraph found that more than half of all businesses with 250 people said that they trade overseas.
With just 5% of our SME respondents intending to invest overseas in the next quarter, something is holding our small businesses back. But what exactly is it?
SMEs frequently cite access to finance as the biggest barrier to their international expansion plans. Bank loan applications are becoming more rigorous and the Government’s referral scheme won’t be up and running until the end of 2016.
But it also seems that there is a lack of desire to trade overseas. Our Confidence Tracker found that SMEs feel downbeat about the future of their business, with just under half of SMEs expecting sales to increase over the next quarter.
Meanwhile the top challenges for exporters are a lack of skilled staff and increased competition from other firms and the primary reason for investing is to keep ahead of competitors. This suggests that for international small businesses, the competitive environment is starting to bite.
But SMEs need not fear the concept of exploring opportunities abroad. The Government is leading the way, taking clear steps to build trade linkages with growing economies in Asia. With visits from China’s President Xi Jinping, India’s Prime Minister Modi and Cameron’s recent visit to Malaysia, it’s clear the direction of travel is to create a strong connection with emergent Asian economies.
So how can SMEs be a part of this shift?
With a number of new trade opportunities opening between the UK and Asia, SMEs need to assess the landscape and ponder the best ways for them to tap into the new found opportunities.
There are risks in moving into a new market so SMEs should take time to research which market best suits their products and ensure there is a demand for what they are selling.
By carrying out extensive preparation, business owners can minimise the chance of failure and maximise profitability. Finally, SMEs need to ask themselves: is it funding holding you back – or is it something else?
If it is a lack of finance, nervousness about trading in new markets or a simply a lack of experience, our Export Finance team are here to help.