Many small businesses are looking to grow, but with the UK economy now back in a double-dip recession, they could be looking overseas for new markets and business opportunities.
I know many small firms think the UK market is big enough for them – and for micro businesses that’s probably true. But there’s a clear link between exports and growth and higher productivity. Those firms that export are more likely to expect growth in turnover and in gross profits and I know plenty of small businesses that are looking beyond the white cliffs of Dover to find new markets.
Just over half of SMEs (53%)* already export their goods and services, according to research we conducted into business confidence in the SME sector. Many of those want to ratchet up their foreign sales and almost a quarter (23%) of small businesses leaders told us they plan to sell a little or a lot more overseas in the coming year.
Many are looking far beyond Europe to the fast-developing BRIC economies, which they regard as being the main opportunities for export growth in the coming year: China – 26%, India – 20%, Brazil – 18%, Russia – 11%.
But more needs to be done to encourage SMEs to export. A study** of UK companies showed that those beginning to export enjoyed a 34% boost in productivity, while those that exported were 11% more likely to survive than those that rely on their domestic market.
In its UK Enterprise Survey 2011 – Export Report***, ICAEW stated the government should give more support and emphasis to promote SMEs to export. It said SMEs looking to export need more information on the markets they target to enter, especially data on relevant countries and industry sectors as well as details of commercial law. Finally, while existing exporters have recovered well, more needs to be done to encourage SMEs to internationalise to avoid flat-lining export growth.
To be fair, the UK government’s new business strategy, “Britain Open For Business”, has tasked the UK Trade & Investment Agency with stepping up its efforts to encourage many more SMEs to export.
As an insurer of SMEs, Hiscox has plenty of clients that export, so you can rely on us to help you negotiate the pitfalls of expanding overseas.
* Populus interviewed 502 business leaders (owner managers, proprietors, managing directors, board level directors / partners, and directors) in SMEs with up to 249 employees in the UK online, between February 8-22, 2012.