The Untapped Potential of Scaling Internationally for UK SMEs

 The Untapped Potential of Scaling Internationally for UK SMEs

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As a business owner and advocate for scaling globally, I’ve observed a striking paradox within the UK’s economic landscape.

Despite there being 5.5 million SMEs across the nation, less than 10% engage in international trade. This is a significant missed opportunity; exporting offers a range of benefits that can catalyse business growth, enhance productivity, and foster innovation. Moreover, it also allows businesses to diversify their risk exposure, which is particularly important in today’s global economy.

The journey to exporting is often perceived by SMEs as fraught with obstacles, from fear of unknown markets to cost concerns. In fact, the Department for Business and Trade’s National Survey of Registered Businesses’ Exporting Behaviours, Attitudes and Needs highlights perceptions of administrative costs, burdens, and regulations abroad as the most commonly-cited barriers to exporting, impacting one in four (26 per cent) of businesses surveyed.

Despite these challenges, I firmly believe that with a robust exporting strategy, these barriers can be overcome – and in some cases, aren’t actually barriers at all. A few straightforward steps can significantly enhance an SME’s exporting potential.

Practical steps to begin selling internationally: agents and distributers

Before embarking on an export journey, it’s crucial to evaluate the resources available within your team for managing export activities. Are you going to have one employee looking after export? Do you have the necessary capital to fund visits to your target market to meet potential buyers and understand the end customer?

This is where engaging in exporting programmes can prove particularly valuable. At the start of our journey, we took part in a programme run by the Department for Business and Trade (DBT) which provided essential knowledge on working with distributors and agents. In addition, the free, online seminars offered by the UK Export Academy serve as an excellent resource for business owners, covering a range of topics from initial steps to in depth, market information.

If you are exporting goods, finding a sustainable distributor or agent is key, as they can significantly influence your market reach. An agent acts on behalf of the company to negotiate and conclude sales without owning the goods. Meanwhile, a distributor buys goods from the company and resells them to their customers.

For an agent, owners need to factor in the cost of commissions as well as develop a structure which you can leave in the hands of the agent. Whereas a distributor acts as your boots-on-the-ground and allows you to sell the product directly into them. Both have pros and cons, but the choice ultimately depends on your company’s strategy, the nature of the product and the specific market conditions. We found that finding a good distributor helped us expand from zero to 400 stores within just a few months!

Accessing a range of free resources

You may think that gaining access to expert advice, guidance and contacts will come with a cost, but the Department for Business and Trade offers a range of free services to businesses looking to trade internationally that they can take advantage of. This might involve giving you access to an International Trade Adviser (ITA) to offer one-to-one, impartial support on a myriad of topics such as reviewing your export strategy, connecting you with relevant contacts in international markets, advising on the language and culture, and navigating legal and regulatory issues.

There are also a host of free resources on DBT’s website, offering expert guidance, tools and services on topics including comprehensive market guides to help you understand which market is right for your product or service, as well as detailed insights on topics such as duties, taxes, customs, and tariffs.

Unlocking the benefits of scaling globally

For UK SMEs, exporting presents a pivotal choice to expand beyond domestic borders. International markets offer a broader customer base, greater revenue potential, and the ability to spread risk across multiple regions. Exporting can lead to increased sales and profit, as some international markets may have a higher demand for goods and services from the UK, allowing businesses to charge a premium price. It also provides a competitive edge and drives economies of scale, which can enhance profitability.

Moreover, exporting can accelerate business innovation. Launching products in similar markets abroad can serve as a test bed for innovation without risking the brand’s reputation domestically. The learnings can then be applied to improve the business in the UK.

As the UK redefines its global role post-Brexit, it is imperative for businesses to seize international opportunities. Exporting shouldn’t merely be an option; it is a strategic imperative for SMEs aiming to thrive in the global marketplace. With the right approach and support, the journey to exporting can lead to a world of untapped potential and prosperity.