Insurance · 5 September 2016

Small businesses not exporting despite success stories

japn team photo magic whiteboard
Magic Whiteboard has shown what kind of export-led growth is possible for a small firm

The majority of UK small businesses (60 per cent) are not exporting abroad and potentially missing out on millions of pounds of lost revenue.

This is according to research by the Royal Mail, which found that 26 per cent of small businesses cite the cost of complexity of getting through customs as the main barrier to exporting, despite the fact that many international orders from outside the EU fall below the minimum price threshold at which customs duties are chargeable.

Other reasons given by small business owners for avoiding exporting were a lack of knowledge of the market (21 per cent) and language barriers (21 per cent).

However, the research shows that those who are not selling overseas are missing out. Among the 40 per cent of business which sell internationally, just over a quarter of sales this Christmas (26 per cent) are expected to come from international orders.

The survey found that 35 per cent of small business owners believe Europe holds the key to generating new sales for their business. Some businesses look even further afield, with ten per cent of respondents currently selling to customers within the EU and looking for opportunities to sell to non-EU customers.

Export feasibility could be set to change in the wake of the EU referendum result. While still doable, it is certainly likely to become harder for small businesses to export to Europe. This could be potentially damaging to the government’s target of raising exports to £1tn by 2020 – a goal that trade minister, Francis Maude, admitted back in January was already a “big stretch”.

However, evidence of exporting and international-led growth has been shown to be possible for smaller companies. Magic Whiteboard, which won backing on Dragons’ Den back in 2008, has already made the leap to exporting to both EU and non-EU customers and claims it is relatively simple to maintain relationships with non-EU clients.

Neil Westwood, founder of Magic Whiteboard, which is now turning over around £1m, told Business Advice: “It was a natural progression to start exporting Magic Whiteboard overseas. We initially started with English speaking countries like Australia and the USA, speaking the same language make things a lot easier.

“We then focused of the big markets in Europe, France, Germany and Spain. We translated our webpage into all these languages.

“This year we have started to export Magic Whiteboard to Japan – there are 120m people living there, so it is a very big market. We have recently been to the biggest trade show for stationery in Japan.

“We don’t find it any more difficult to export. In Europe it is just the same as sending goods in the UK, outside the EU you have to send one extra piece of paperwork.”

Small businesses interested in expanding their global reach can now sign up to the government’s new Directory of Exporters initiative. The scheme aims to connect UK exporters with a global database of potential business partners, and is being supported by five major high street banks.

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Letitia Booty is a special projects journalist for Business Advice. She has a BA in English Literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.

On the up