It has been a mixed year for the UK. The economy has remained resilient with the lowest levels of unemployment since the 1970s. However, growth has also stalled, inflation is on the rise and wage growth remains stagnant. The uncertainty caused by the UK government negotiating its exit from the European Union has also hurt business confidence and, because of all this, SMEs are beginning to pull back from international trade.
Every quarter, WorldFirst, the international payments company, digs deep into UK SMEs’ behaviour and attitudes towards international trade in our Global Trade Barometer. Over the past year we’ve seen decreasing appetite to trade internationally. Our research showed that 1.1 million fewer SMEs traded internationally in the last quarter than during the same period last year.
The worrying news doesn’t stop there. When asked about international growth plans, SMEs were pessimistic. For instance, 70% of SMEs expect international trade to decline or remain stagnant throughout Q4 with less than a quarter of SMEs expecting to export in the future. In other words, the gloomy sentiment that we’ve seen over the past three quarters haven’t subsided yet.
This is especially discouraging for the overall UK economy. In a post-Brexit world where Britain is redefining its trade relationship with the rest of the world, SMEs pulling back from exporting will have a negative impact on already slowing economic growth.
For SMEs themselves, this is exactly the time to be considering opportunities further afield. With UK consumers tightening their purse strings, SMEs could be limiting their growth potential by not looking at consumers beyond British Isles. Research WorldFirst conducted last year revealed that the average UK SME gained an additional £287,000 in revenue from exporting alone.
Furthermore, it has never been easier to export. Due to technological change, most businesses have access to a wide pool of foreign markets and customers in just a few clicks.
You don’t even need to spend time and money developing your own shopping portal to sell internationally. Online marketplaces like Amazon, eBay and Rakuten have opened up consumers from across the world to UK businesses, enabling UK SMEs to build an international business from the comfort of their own homes.
Online marketplaces provide a relatively low-risk gateway to the world as most already offer listing and logistic solutions for small businesses. Many businesses are already taking advantage of this, with a quarter of all small businesses that sell online using an online marketplace according to WorldFirst’s research with the Centre for Economics & Business Research.
There has also never been a more ideal time to export from a financial point of view. A weak pound means that British produce and services are more competitively priced in the global market. The Made in Britain brand is also stronger than ever, resonating with shoppers across the globe who have come to expect premium quality goods from British companies. Furthermore, with fintech organisations like WorldFirst offering small businesses help from funding to managing international payments, the process of international trade is now easier, faster and a whole lot cheaper.
As an organisation, we work with a lot of companies already doing this and have seen the growth from start-up dipping their toes into exports to mini-multinationals selling into dozens of countries with only a few support staff. We know first-hand that exporting doesn’t have to be a scary leap into the dark. It can be the difference to your business and as the UK negotiates its way out of the EU, small business exports will make the difference between success and failure.
We always say that if you’re 70% sure you should be exporting, then you probably already should be. With all the technology available to get you started, now is the time to get going.
This article comes to you courtesy of WorldFirst, the international payments company.