Government-backed agencies designed to help UK businesses trade overseas are reportedly struggling to meet targets as SMEs show reluctance to sell overseas.
That’s according to a report from the British Business Bank which found that exports from small and medium-sized businesses account for just 32% of UK exports, down from 50% 11 years ago.
The report had set out to explore whether access to export finance and monetary support, in general, was fuelling the decline but found that SMEs don’t believe they lack access to the finance they need – although lack of support from banks and advice on the risks that come with targeting new markets were stumbling blocks.
The report stated that: “The evidence shows that supporting SMEs to establish and grow is more important than providing them with better access to finance specifically to support their exports.
“SMEs are reluctant to take on additional external finance, even if it means accepting a slower growth rate. Yet growth is the key to exporting: exporting SMEs tend to have higher revenues and a longer history than non-exporters. Supporting SMEs to grow therefore appears to be the best way of growing SME exports.”
Whilst almost 40% of SMEs who took part in the study said they had taken on some form of additional finance, only 8% was allocated to exporting activities. Meanwhile, a quarter of firms who were already selling overseas said they were experiencing a lack of time and other resources to sell domestically – let alone internationally. For businesses that have yet to start trading on the global stage, over half say they lack the personnel resource to do so.
The government has been active in supporting exporters, especially since the EU referendum, including the launch of new digital tools and enhancing grants to support in areas such as customs declarations, IT and training.
However, many businesses still lack the experience or in-house know-how to really make a go at selling their products and services overseas. That’s despite the fact that, on average, SME exporters generate an extra £287k in sales each year, with 1 in 10 boosting profits by over 20% in the process. Yet only 5% of SMEs are considering exporting for the first time in the next 5 years.
The opportunities open to UK businesses to explore expansion into foreign markets is something we at Go Exporting are passionate about, already supporting organisations to identify high-potential markets and forge new partnerships and distribution agreements.
If your firm is considering exporting, or has begun but would benefit from outsourcing key research and growth management tasks to a specialist exporting consultancy, learn more about our services here.