UK SMEs show growing confidence in exporting, survey finds

It remains to be seen whether SMEs will rise sufficiently to the challenge laid down by the government to help the UK double exports to reach a trillion pounds by 2020.

However, a rise in confidence since economies began to emerge from the financial crisis means that more SMEs are either already exporting to more countries than ever before, or they are planning to.

In fact, a YouGov report out on Monday, reveals that of 2,000 SMEs surveyed, six in ten expect to be exporting by 2016, a 20% increase on current levels. Furthermore, of those already exporting one in five expect to increase the number of countries they are active in by 2016 – and more than a quarter, 28%, expect their export revenue to increase over the next two years.

Not only are SMEs more confident they will increase export revenues, more than one in 10 expect to export beyond the EU and the US markets, which traditionally dominate UK trade. In fact, nearly one in five entrepreneurs aged 25-44 are trading with China already and one in six are trading with India and Russia, the report found.

The finding that so many SMEs expect to begin exporting for the first time, or open up new markets, comes nearly a year after MPs warned the government body behind the current export drive, UK Trade and Investment (UKTI), it needed to do more to encourage small businesses to seek growth abroad. The Public Accounts Committee called on UKTI to give greater assistance to UK SMEs. They traditionally do not perform as well in international trade as their French and German counterparts, according to PAC chair, Labour MP Margaret Hodge.

Andrew Millard is the senior director of international marketing at video conferencing provider Citrix, which commissioned the research. He believes its main findings underline the progress UKTI is making. And there’s a sense of confidence among SMEs that new economies around the world continue to grow, following years of recession.

“The government is putting a lot of work into encouraging companies to look beyond their domestic markets to trade all over the world, so it’s really encouraging to see UK SMEs are so positive about exporting,” he says.

“The big thing we picked up on through the research is that – particularly with younger SME owners, but also across the board – companies are seeing there really are no barriers to international trade. It’s creating a real momentum behind the drive to get SMEs more involved. Although most are starting with local EU markets, as well the US, where there’s no language barrier, young SMEs really are proving that as far as trade is concerned, the world really has shrunk.”

Spreading risk

This is certainly the case for Rutland-based Surface Generation. Ben Halford set up the company 12 years ago, but it relaunched four years ago to move on from plastic injection moulding to modern carbon fibre manufacturing equipment. Roughly 90% of the company’s turnover comes from exporting, primarily to the Far East and the US. Like many young company founders, he is not daunted by distance nor geography.

“We’ve actively opened up the North American and Far East markets because, although they’re obviously far apart, it’s a lot less risky for our business,” he says. “When the recession hit in 2008, we went back to the drawing board and redesigned the equipment we go to market with and we wanted to make sure we weren’t overly invested in one region because we’d seen how risky that was.

“We opened up east Asia and the US because that’s where the biggest demand is for our equipment – for making consumer electronics in east Asia and making car and plane parts in America. The demand isn’t as strong in Europe but we think that will change.”

Market research

It is a similar story at Manchester-based Faith Products whose Faith in Nature branded natural hair and skin products sell widely in the UK, as well as the US, Scandinavia and throughout east Asia. Managing director Joy Parkinson believes that companies have to be flexible and look beyond EU markets, which are just a short plane trip away.

“You need to do a lot of research to find out which markets are best for your products,” she says. “This may well mean looking further afield than those nearest to you. France and Germany are far tougher markets for us, for example, than those we’ve had a lot of success in, because regulation is a lot stricter and there are already some major players dominating the markets.

“So we’ve researched places where we think there is room for growth for our products and contacted distributors. It also works the other way round. We get enquiries from appearing at trade shows and – my top advice to any other company – our website is optimised to perform well for Google search terms around UK manufacturers of health products. That makes us a lot easier to find and has helped us open up new markets.”

In keeping with today’s research, Parkinson reveals the company uses social networks, video conferencing and email to keep in contact with current and potential distributors. Her main advice to any SME looking to begin exporting or increase the number of countries they export to is, in addition to optimising a website to perform well under apt search terms, to invest in people with export expertise.

Within its team of 40 employees, the company has taken on experts with years of experience in exporting to different regions because it helps to have people well versed in setting up cross-border trade agreements and checking up on local rules and regulation.

Also, Parkinson advises, it is a very good idea to get in contact with your local UKTI representative who can help organise research into different markets for your products and can also co-fund trips abroad so an SME can travel to a potential new market and make contacts.

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