When Is It Time For Your SME To Start Exporting?
In recent months, emphasis has fallen on the value of small business exporting their products and services overseas. It culminated with Export Week promoted by UK Trade and Investment, in which many SMEs were encouraged to attend seminars and hear speakers on the value of exporting and how you can do it too.
The Business Secretary, Vince Cable has actively campaigned to get more small businesses to sell their products in foreign markets. Small businesses have been heralded as the saviours of the UK economy, and exporting goods abroad is also a great way to ensure a swifter economic recovery.
Over the last two quarters, the UK has seen a dramatic increase in exporting. June 2013 saw a record-breaking high of £26.9 billion worth of exports from the UK. When so many SMEs are falling into outsourcing, and there are so many arguments encouraging more to follow suit, it’s likely you have a few questions about where your business fits into this picture.
Is exporting for everyone?
Many business owners have expressed an uncertainty when faced with the prospect of selling their services overseas and taking such a big gamble with their income. When asked by Barclays, many responded that they simply did not know where to start and 52% of business owners blamed psychological barriers for not starting to export sooner.
In spite of this, however, 86% of SME owners said that they found the process of exporting to be either exactly as they had anticipated or even easier than they had initially hoped.
It is an attainable goal for most small businesses. You can expand your target audience and enter new markets, offering opportunities for growth that may no longer exist for you here in the UK.
On average, a Barclays survey found that businesses continue to develop and grow year-on-year until they hit their fourth year in business. When you reach your growth ceiling, exporting may become an attractive option for expansion.
Many business owners whose products and services are already available outside the UK find that operating in two or more countries offers advantage. Exporting provides your business with a cushion to protect you against downward trends in your domestic market, and vice-versa.
You also have the opportunity to move into less crowded markets. Small businesses in the UK are focused on online marketing and a building hefty social media presence, making the online market in the UK the most saturated in the world. Research the demand for your product or service abroad as well as the online competition in those countries to see if you could move into a less competitive space.
What are the pitfalls?
For all the potential for growth and expansion that exporting offers your business, you must also think carefully before venturing outside the UK with your business. Exporting is typically the domain of businesses that are already successful. If you are not already turning a comfortable profit, it could be that the risks outweigh the benefits of exporting for you.
It is imperative that you research the market of your country of choice. It could be that there is simply no demand for your product or service in the country where you had originally focused your efforts. Do your research before you start investing in a new business model, advertising platforms and increased production.
Over a third of potential exporters cited the resource levels and access to finance as “highly influential” factors in their decision-making process. Make sure you are aware of the costs of exporting and the duties you will need to pay when you sell your products outside the UK. This is a good guide explaining the logistics of exporting for beginners.
It is important to make an informed decision.
Be as informed as possible before you make your decision. Know your market and be aware of the risks. Familiarise yourself with the tax codes and marketing strategies; maybe come up with a second business plan and map out how you forecast your growth overseas in the coming months and years.
Exporting offers opportunities for growth and business expansion that the UK cannot continue to offer forever. The world is a pretty big place and if you bring your business to it, the possibilities could be endless.