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Exporting for small businesses: Finding new markets

23rd January 2019

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For many small businesses the prospect of exporting can seem daunting. Caught up with the daily pressures of work, they don’t know where to start. Yet exports can be a great way to expand a business and lighten its dependence on a local market.

Dana Elman, who works at the Federation of Small Businesses (FSB), understands this only too well. “Sometimes it is actually very difficult for a small business owner to think beyond day-to-day life,” she says.

Even when they do export, some small and medium-sized enterprises have no clear strategy for it. They will fulfil orders from abroad, but might not even consider themselves exporters. “One of the things we encourage businesses to do is to think globally from the start.”

Reaping the benefits

The growth opportunities presented by exporting are clear. With more markets, businesses have the potential to reach more customers. Exporting can reduce the risk of being dependent on one country, which might have its ups and downs, and can balance out seasonal slumps.

True, the uncertainty surrounding Brexit presents its own special risks, but there is plenty of support out there for companies willing to explore overseas markets and take the plunge. Dana says: “There are some small businesses who have growth intentions, who are waiting to apply for external finance because they don’t know what Brexit will bring. People want certainty, that’s the major thing. It’s really hard to plan ahead, make decisions when you don’t know what’s happening tomorrow.”

Will Butler-Adams, managing director of Brompton Bicycle, maker of the famous London-built folding bicycles, says he decided to start exporting early on. He wanted to find a way to iron out highs and lows in demand as people are less inclined to buy bikes in the UK over the cold and wet winter months. Brompton, founded in 1975, now sells in 44 different countries, with 80% of its sales outside the UK.

A Brompton Bike, unfolded, in front of a lovely waterfront scene
Brompton Bicycle is a British manufacturer of folding bicycles founded in 1976

There are plenty of indirect benefits too. Will says exporting makes the job more fun; it provides opportunities to travel, which in turn helps with recruitment.

Business owners say exporting can raise their company’s profile and boost morale. The FSB notes: “Exporting gave small businesses a real sense of reputational pride and they pointed to the benefits of having a broader outlook, such as mutual learning from working in overseas markets.”

Dana says that, in turn, helps companies become more innovative. “If you are exporting, it is easier for you to think how you can improve what you are doing, improve the product, the process, the marketing, or your organisational model.” Exporting forces companies to be more competitive in order to succeed abroad, she says, which also makes them more competitive at home. “That creates a big boost to productivity.”

Finding support

There is a danger of getting bogged down in research when deciding whether to try exporting. Will says: “People are a little bit reticent about exporting anyway. As soon as you start telling people you need to go and get some advice, they are completely terrified.”

Instead, he says business owners should find cheap flights and jump on a plane. “Just get out there, meet people, understand the industry on the other side of the world, and learn.”

That way, business owners can quickly dismiss markets if their hunch is wrong, or will come back excited about the prospect. Will says only then should they start trawling through the reams of advice available.

The Department for International Trade is a good place to start, with its range of guides and practical services, connecting companies with international buyers. For small businesses, the Open to Export website offers a free online planning tool.

Business owners say support from their peers is also crucial in the early stages. The FSB suggests seeking out a local Exporting Club, where entrepreneurs can find other companies that may have experience in their chosen markets.

Hiring advisors

Dana says there are, of course, risks associated with exporting, not least the initial costs involved. She says companies might want to hire advisors if they are looking at markets such as India, China, or even closer to home, Morocco.

“It’s not enough to have the money,” she says. “You need to choose the right people to work with, with the right knowledge and quality of service. The danger of not finding that person is that you’re losing money and this is costly for small businesses who have scarce resources.”

For businesses concerned about costs, there are huge numbers of loan and grant schemes, many aimed at specific target markets or industries. UK Export Finance offers further financial help to exporters so that businesses can offer attractive financing to buyers, borrow in order to fulfil large orders or take out insurance against buyers defaulting.

Dana points to other risks for small businesses to be aware of, such as intellectual property theft, or the threat of legal disputes.

She says the most successful small business exporters are, “those who have shown a good balance between experimentation and careful planning; between assessing the risks and the opportunities”.

That is something business owners are used to. Will says: “At the end of the day, business is taking calculated risks all the time. If you’re so terrified of making mistakes, you’re not going to get anywhere because you’re not prepared to take a risk.”

He urges business owners to export, not least for the fun they will have: “I’ve just had a world of excitement.”

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