Head of international development at currency transfer specialists World First, Marca Wosoba, takes a look at the export environment for those UK small business owners looking out towards new markets in 2016.
It’s been hard to escape the fact that the pound has taken a hammering during the first couple of months of 2016. Some are blaming uncertainty caused by the UK’s referendum on EU membership, with others focusing on the dwindling likelihood of an interest rate hike by the Bank of England in the near future.
Truth be told, both are probably equally to blame, along with fears over the Chinese economy and a labour market unable to create meaningful wage increases.
While the fall in the value of the pound have sometimes been front page news, much of the focus has been on the increased cost to UK holidaymakers. But, while a plate of croquetas and a sherry may be a Euro dearer now than last summer, small businesses looking to take the first foray into exporting may actually benefit from the weaker pound.
The government has declared that boosting exports is one of its priorities. George Osborne announced a doubling of support for British exporters to China in last year’s Budget and expectations of further trade related help in his 2016 speech on 16 March. And though small business owners may feel the need for even more support to be able to crack international markets, there are things that can be done themselves.
Take advantage of the opportunities
Less than 20 per cent of UK small businesses are involved in exporting, compared with 33 per cent in the USA and 60 per cent in China. Many small businesses are reluctant to explore international markets but the evidence shows that it could be key to success.
Exporting can have a tremendous impact on small businesses. Recent UKTI research showed that firms which choose to export become 34 per cent more productive in the first year, while those already exporting achieve 59 per cent faster productivity growth than non-exporters.
The world is full of opportunities for UK exporters. In fact, many business owners could find that their products are more suited to overseas markets considering the competitive business environment in the UK.
If you’re thinking of exporting, look at what your opportunities are. Do you already get enquiries from customers abroad? Does your product have a unique selling point that transcends cultures? These are all signs that your business could be ripe for exporting. Time to examine the opportunities.
Perhaps one of the reasons that more SMEs don’t trade internationally is that owners don’t know how to. Learn more about what it takes, get knowledge of the markets you want to trade in, take advice from those that have done it themselves and understand the risks involved. Get any training you need.
There are plenty of resources available. Government agencies such as UKTI and the Department for Business Innovation & Skills exist solely to help small businesses thrive both domestically and abroad and have a range of tools and services to assist them on their way.
For example, the Exporting is Great website has an updated database of thousands of live opportunities for SMEs looking to export, all you need to do is type in your specialism and it will come up with a list of potential contracts.
Choose the right place
Let consumer demand drive your strategy. Make sure you choose to sell your product where there is a genuine need for it. Is there the potential for growth? What sort of consumer is likely to benefit from your product and what demographic are they likely to be in? Answering these questions will enable you to narrow down key markets or tailor your products so they are suitable for export.
Make sure you investigate new markets thoroughly. Consider foreign competition, local customs, laws and industry structure and tweak your plans accordingly. Government advisers can help you with this, UKTI have regional teams with dedicated language and culture staff to assist you on your approach and plan a route to success overseas.
Choose the perfect partner
Some businesses choose to work with a partner who is already familiar with the market. This includes working with a distributor that could sell your products locally and a specialist foreign exchange provider who can bring your revenue home. Not only will they make the operation run smoothly, but they can also save you money and a lot of stress.
If you do, make sure you take the time to find a partner that offer a solution that fits around you. Not shopping around can be a costly mistake.
Be there long-term
Once you’ve started, commit to sticking it out. There’s nothing worse than finding a good customer only for them to be disappointed when you’ve gone a year or two later. And why would you leave when you’ve found some good customers? They’re not easy to find in the first place.
The road to becoming a master of overseas commerce won’t be an easy one, but with the right support and partner structure, you’ll soon be looking for your next international challenge.
Marca Wosoba is head of international development at World First.
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