The government’s “march of the makers” is in danger of ending at the nation’s shores.
The willingness to trade internationally has never been stronger, yet hard evidence from the Office of National Statistics (ONS) indicates that while there is definitely a will to export, small businesses remain unsure of a way of doing so.
I have seen first hand that the world demands British goods. With more SMEs seeking to export, it’s time we reconsidered what’s going wrong, and help smaller businesses meet this demand.
What is going wrong?
In February, the ONS revealed that the UK’s balance of payments deficit had widened to £13.7bn. This is the largest it’s been since 2008, when the world was teetering on the verge of a financial crisis.
Last week the government-run UK Trade & Investment (UKTI), tasked with boosting the UK’s presence in international markets, revealed that the desire to trade has never been greater. In the week they’ve designated as ‘Export Week’, they announced proudly that 20,000 businesses have responded to the government’s ‘Exporting is Great’ campaign. The campaign was set up in 2015, with the target of ‘inspiring and supporting’ 100,000 additional exporters.
I personally see this same enthusiasm from SMEs daily. But I also see that this enthusiasm to export is often dampened by the cost and perceived risk of dealing with export markets.
This is a great shame. British businesses of all sizes continue to produce goods that are highly coveted around the globe. While the success of the UK’s service sector is frequently invoked, UK businesses have an endless range of products to offer international markets. I’ve seen firms exporting niche goods like yacht-ready, light-weight cars and traditional goods like good-quality British toys. What’s more they help them trade across markets from China to Brazil.
What can be done?
Initiatives like that of UKTI should be applauded, but in all the noise there are two challenges that are at risk of being overlooked: currency risk and supply-chain finance.
Currency risks and credit lines are still perceived as an obstacle for small businesses. And up until recently, this was true. Fluctuations in exchange rates and complications in lines of credit can be debilitating to smaller businesses, who lack the resources to weather the unexpected market movements that working across borders so often entails. Banks are frequently unwilling to mitigate these risks for their smaller customers. Banks have a complex structure and a high cost base which makes providing these services unprofitable.
Additionally, until recently, access to detailed market information and expert currency management simply wasn’t readily available for most SMEs. Innovation, from technology to alternative finance providers, has broadened access to these services that once only larger corporations could rely on. The supply of British innovation should not be stymied in the 21st century by improper management of currency risk or uncertainty over credit lines.
We need to ensure that a way to export is found – wherever a will exists.
The government clearly wants to add more ballast to the aspirations of exporters. Part of this requires greater access to information and advice to SMEs, ensuring that all are aware of the gains to be had through exporting.
Our work with small and mid-sized companies has involved 140 currencies, 10,000 organisations and 180 different countries. There is no doubt that there are huge opportunities for companies abroad, but also an array of obstacles to navigate. Informing businesses about the helpful options currently available is the first step.
