Small Businesses Export to Expand

Steve Cooper, Vice Chairman of Barclays Business Banking

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The Diamond Jubilee celebrations and the London 2012 Olympics have focused the world’s attention on the UK. It has never been a better time to be British, and that creates tremendous opportunities for small businesses to trade in international markets. The Department for Business Innovation and Skills (BIS) and UK Trade and Investment (UKTI) certainly believe so; they have committed to raising the number of small businesses that export to one in four by the end of 2012.

At Barclays we are dedicated to helping small and medium-sized enterprises meet the challenge of trading around the world with confidence. Whether a company is ‘born global’ or has been trading solely in the UK for twenty years and is looking to export for the first time, we have the experts in place across the globe to offer advice and support so we can help businesses start exporting now.

To highlight some of the benefits that come from exporting, we commissioned independent research among 1,500 UK businesses. The findings of that research, launched today, and reveal just how beneficial exporting can be:

• Businesses that export grow by almost a third in just two years
• Almost a third (29 per cent) of small and medium sized enterprises (SMEs) see a positive impact on their bottom line within just six months of expanding into international markets
• Over half (54 per cent) said this growth exceeded their expectations
• An average of 336,000 more people are being employed across the UK as a result of businesses exporting or selling to overseas customers

Given the positive impact on the bottom line of a business, it’s not surprising that 31 per cent of those who currently export are planning on branching into new markets in the next year and a further 24 per cent in the next two years.

And, with continuing uncertainty in the Eurozone, the research found that businesses are now looking for export opportunities further afield. As shown by the infographic, nine out of the top ten countries that businesses who’ve been exporting for three years or more are planning on branching out to, are now outside of Europe, with Hong Kong, India, China and Australia and Canada topping the list.

What’s also interesting is that 87 per cent of businesses report other benefits to exporting, beyond business growth. These include having greater confidence in the longevity of the business (44 per cent), increased productivity (37 per cent), stronger innovation (28 per cent) and a longer lifespan for their products and services (27 per cent).

It’s true that this ‘expansion effect’ doesn’t happen without overcoming certain challenges. Exporting can be a risky activity. It may involve additional costs over merely selling to a domestic market. This can include owner-managers’ time to scope out a new market, finding additional resources (raising finance, finding staff etc.) to increase output capacity, developing appropriate marketing activities, overcoming language and cultural challenges as well as understanding and meeting different national regulatory standards.

However, despite these potential costs and associated risks, SMEs report that the benefits of exporting were better than anticipated: 15% of owner-managers said the experience was much better than expected and 39% better than expected.

And one final word of encouragement – to the smallest of small businesses, the 46% who in our research thought that they were too small to export: In fact, 43% of small businesses saw the
 positive impact of exporting within just six months, compared to only 16% of larger businesses (with a turnover of between £1 million and £5 million).

It’s clear from our research that exporting can have very positive results right across the business. Those SMEs that are already exporting are not standing still and are already considering expanding their sales footprint beyond their current markets. The challenge now is for those firms that are not exporting but have the potential to do so to take the first steps on their journey into overseas markets.

For more information on the support available at Barclays including its new “Business Abroad”, package, please visit  www.barclays.co.uk/businessabroad