By Richard Reid, Head of KPMG’s High Growth Markets practice
With the UK limping out of double dip recession, a lot of businesses, especially in the SME sector are searching for ways to grow and exporting, particularly to new markets in the fast growing economies, could be an answer.
In my view, having an exporting plan, should be a key feature of ambitious businesses with growth on their minds.
Traditionally, exporting is something that larger UK businesses have been very good at, but encouraging more SME businesses to start exporting is a central plank of the government’s growth agenda. In June this year the UK’s trade gap widened to its worst level since comparable records began in 1997 and currently only one in five SMEs export compared to a European average of one in four.
For those companies already exporting, there is the added issue that the UK’s biggest export markets, Europe and the US, have themselves become sluggish and UK companies could find themselves in a vicious circle of stagnancy if they don’t break free from this reliance and exploit the booming consumer wealth and appetite for western products and brands evident in the developing markets.
The Prime Minister has said that he wants businesses to double exports to £1 trillion in 2020 and increase the number of firms exporting by 100,000 by 2020.
So what’s on offer for businesses looking at this route?
Exporting gives companies access to and profile in new markets, new revenue streams and spreads the risks to that business. It is also likely that as a result of exporting, a business can become more nimble, with a more responsive and innovative culture.
However whilst the opportunities can be plentiful they can also be challenging. You need to make sure that you have researched the market thoroughly, chosen your business model carefully and understand the tax and legal environment and overseas payment mechanisms. Also you need to understand your competitors who are already operating in-country – can you compete on price or quality with what they are already putting into the market? If not, how will you expect to win market share?
Finally, for any business looking to export, whether products or service, build in an export plan, which is connected to your core business strategy as “playing” at exporting will bring (at best) limited gains.
There’s lots advice on offer for businesses, including UKTI and UK Export Finance can provide additional finance and insure risk. Therefore, to my mind, opportunities are plentiful for ambitious businesses with a growth agenda.