Time to explore the road less travelled for new trade opportunities
Exports Exporting to new markets can be hard work but once the barriers are overcome the rewards can be rich.
Small businesses tend to export to familiar places rather than seeking out new markets where there can be bigger opportunities, says Chris Walker, International Trade Chair at the Federation of Small Businesses. Of course, the UK’s departure from the EU means there should be even more opportunities in the medium to longer term for trade to non EU markets. It’s crucial that small businesses get the support they need to capitalize upon this.
For many small firms, there can be a bit of a trade-off between markets which are more easily accessible - with fewer regulatory barriers and low or no tariffs – compared to markets which may be more difficult to access but which may offer higher rewards in terms of growth potential for their business. This may not be natural for small businesses, as many tend to gravitate towards the easier markets to trade with. However, small firms should be given the correct support to help them consider whether their business can benefit from trading further afield with new markets that may offer more opportunities.
Finding profitable markets
"Going global may be difficult for a small business to consider, but it can be done as I know from running a business that exports between 50 and 70 per cent of its sales," Walker says. "Exporting is easy within the EU but there is more competition. Some firms will need support to look at more profitable markets rather than the easiest."
The EU single market makes things so simple and low cost and many SMEs look no further. Walker says. "At the moment, selling to the EU involves one invoice and little paperwork. In contrast, selling to the US requires six copies of the invoice and much more additional information which can slow shipments down at the border, which for a small company may be reflected in a significant increase in costs. Outside the EU you are potentially dealing with approvals processes and even hidden trade barriers. Small companies don’t necessarily have the export experts ensuring everything conforms to individual standards and that the paperwork is completed correctly."
So the difficulties of trading with such countries can also be a deterrent for many small firms that feel less able to consider unfamiliar markets. However, Walker points out that once you have the know-how, the contacts and the systems to penetrate the trade barriers, the profits can more than compensate for the difficulties.
The first step is to research the global market for your products, to identify areas of opportunity and make enquiries to try and establish contacts with potential partners.
“Our research shows that a lot of our members export reactively - they get a call from someone in India, for example, who like their products and would like to be an agent or distributor. This is good but the exports tend to die when the contract expires," Walker says. "Companies need to be proactive by looking at the opportunity in every market and asking themselves whether that opportunity is better in Brazil or China or an alternative country."
The government is constantly trying to improve the export support it offers to small businesses – and it’s certainly worth a visit to their Great.gov.uk website. However, more could be done to focus on helping small businesses that want to take the “less travelled” export road. We understand that need and want to do what we can to help. From later this year, FSB will be offering some new services and expert support for small firms looking for new exporting opportunities.