Harrison Spinks MD on the best export strategies for SMEs
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My key idea: SMEs should implement well-researched export strategies in order to grow. Resources like UKTI are incredibly useful, and the government should do more to raise awareness of these services. SMEs also need to look further afield than the EU.
Exporting may seem like a difficult step to take for SMEs, but it can bring companies a raft of benefits and there is plenty of help available if they look in the right places. In fact, businesses are 11% more likely to survive if they export, according to research from UKTI.
As we recover from the deepest recession we’ve been in for decades, areas of the British economy remain quite fragile, so it’s wise for companies to hedge their bets in other markets where economies are growing and in a better state than our own.
It makes commercial sense. Entering export markets can boost turnover and improve innovation as firms develop new products for particular markets. It can also reduce exposure to risk, by distributing sales across various geographies.
But SMEs need to take their time with exporting. We’ve found that initial moves have to be very considered. For example, everyone thinks of China and the US as the golden chalices for exporting. But depending on your product or service, different systems and laws can make it very difficult to get your product into these markets.
That’s not to say there aren’t options – you just have to be innovative in your approach. From our perspective, the US has very strict laws around products being flame-retardant, so we export components to the US rather than our whole mattresses. It’s about finding out which markets work best for your business.
The government’s UKTI can help. It has embassy teams on the ground in over 100 markets across the world that know and understand the local market, and the feedback and initial research they can provide is really good. We have found UKTI extremely useful, but not enough businesses know about its services. There are more than 40 UKTI offices across the UK, but not all companies know that. I would really like to see the government doing more to increase awareness of UKTI. In our case, it was actually our bank, Barclays, who was first to introduce our business to UKTI, which was a crucial step for us.
If the support was more widely known and used, then as a country we would be better positioned to get on the export trail. That means SMEs could generate more turnover, more profit and more investment, and that’s good for Britain’s economy as a whole. SMEs also need to look further afield in their exporting ambitions. If you look at where Britain is in terms of exporting, then our biggest markets still tend to be fairly local – mostly in the EU.
Our exports into Ireland, for example, accounted for more than into all four BRIC countries combined until 2012.
There are massive opportunities for those with a robust plan looking to export outside the EU. Planning is key. Companies must be innovative with their portfolio of products. There’s no point if they have a product that fails to stand out in any given market. Points of difference are essential. SMEs should target the countries they think will give them the best route to market initially. Once they’ve done that, it’s essential to find the right partner on the ground. It’s easy to pour a lot of good money after bad if you get that wrong, and that can be absolutely disastrous, potentially brand-ruining.
In order to begin exporting successfully, companies simply must have access to funding. Gaining access to finance, whether it’s through banks or private equity, can be very difficult, and that needs to change. SMEs need access to expertise and finance to export. More must be done to give them that access to help them grow through exporting.