Small firms’ short-term strategies holding back export ambitions
Study reveals three-quarters of businesses have not traded overseas
A lack of ambition and knowledge about lucrative export opportunities is holding back the UK’s small firms, with three-quarters of businesses yet to trade abroad, according to a new survey.
A poll of 1,000 small and medium-sized business owners commissioned by currency exchange provider Caxton FX found that nearly half (48%) agreed that short-term business strategies focused on early exits were to blame for the lack of overseas trade.
The survey found that lack of knowledge about exports remained the biggest barrier to international growth, with 40% of business owners citing difficulty identifying the right markets and local contacts and 37% admitting a lack of knowledge about trading overseas generally.
Other practical barriers to growth identified in the study included government legislation and red tape (25%), fluctuating exchange rates (15%), and operating barriers (13%).
When asked what would make them more interested in trading overseas in future, 27% of small business owners cited greater support to identify and investigate market opportunities whilst 21% expressed a desire for less administration and red tape.
The study also found that those businesses currently trading abroad were failing to take full advantage of the global opportunities on offer; 83% of exporters were trading with European nations compared with just 20% in the BRIC countries (Brazil, Russia, India and China), despite the opportunities available in these fast-growing economies.
Caxton FX commissioned the study as part of its Business Without Borders campaign, a new initiative to identify the biggest barriers to trading abroad.
The study highlights a continued lack of confidence amongst UK small firms looking to trade abroad, despite the availability of support initiatives such as the UKTI’s Open to Export and Exporting is GREAT websites.
Rupert Lee-Browne, founder and chief executive of Caxton FX, commented: “There is no denying the enormous opportunities available for small and medium-sized businesses looking to do business abroad, particularly in growing economies such as China and India. It’s therefore astonishing to learn that so few are at present trading internationally.
“With many small and medium-sized businesses focusing on short-term strategies to sell their business, the survey suggests a severe lack of confidence among British firms in taking the leap and exploring overseas markets, despite the global reputation of British brands.”
John Allan, national chairman of the Federation of Small Business (FSB), said of the study: “Many FSB members echo some of the findings in this report. For example, fluctuating exchange rates being one barrier to export. Exporting provides opportunities for businesses to boost their growth prospects and add millions to the economy if barriers such as access to finance can be overcome.
Recent campaigns such as UKTI’s Exporting is GREAT are raising the profile of the help available to small businesses, but for more firms to fulfil this potential, clearer signposting of support such as UK Export Finance is needed.”