The untapped potential of international scaling for British SMEs

As a business owner and advocate for global scaling, I have observed a striking paradox in the British economic landscape.

Despite there being 5.5 million small and medium-sized businesses nationwide, less than 10% engage in international trade. This is a significant missed opportunity; Exporting offers a range of benefits that can catalyze business growth, increase productivity and foster innovation. Furthermore, it also allows companies to diversify their risk exposure, which is especially important in today’s global economy.

The journey to export is often seen by SMEs as full of hurdles, from fear of unknown markets to cost considerations. The Department for Business and Trade’s National Survey of Registered Businesses’ Exporting Behaviours, Attitudes and Needs shows that perceptions of administrative costs, burdens and regulations abroad are the most commonly cited barriers to exporting, affecting one in four (26 percent)) of the companies surveyed.

Despite these challenges, I firmly believe that with a robust export strategy, these barriers can be overcome – and in some cases, they may not be barriers at all. A few simple steps can significantly increase an SME’s export potential.

Practical steps to start selling internationally: agents and distributors

Before embarking on an export journey, it is critical to evaluate the resources available within your team to manage export activities. Do you have one employee take care of the export? Do you have the necessary capital to finance visits to your target market to meet potential buyers and understand the end customer?

This is where participation in export programs can be particularly valuable. Early in our journey we took part in a Department for Business and Trade (DBT) programme, which provided essential knowledge about working with distributors and agents. Additionally, the free, online seminars offered by the UK Export Academy serve as an excellent resource for entrepreneurs, covering a range of topics from first steps to in-depth market information.

If you export goods, finding a sustainable distributor or agent is crucial as they can significantly impact your market reach. An agent acts on behalf of the company to negotiate and complete sales without owning the goods. Meanwhile, a distributor buys goods from the company and resells them to its customers.

For a broker, owners should consider commission costs and develop a structure that you can leave to the broker. While a distributor acts as your boots on the ground and allows you to sell the product directly to them. Both have pros and cons, but the choice ultimately depends on your company’s strategy, the nature of the product and the specific market conditions. We found that finding a good distributor helped us expand from zero to 400 stores in just a few months!

Access a range of free resources

You may think that accessing expert advice, guidance and contacts comes at a cost, but the Department for Business and Trade offers a range of free services that businesses looking to trade internationally can benefit from. This may include access to an International Trade Advisor (ITA) who will provide one-on-one, impartial support on a range of topics, such as assessing your export strategy, connecting you with relevant contacts in international markets, advising on the language and culture, and navigating legal and regulatory issues.

There are also numerous free resources on DBT’s website, providing expert guidance, tools and services on topics including comprehensive market guides to help you understand which market is right for your product or service, as well as detailed insights on topics such as duties, taxes, customs and tariffs.

Harnessing the benefits of global scale

For UK SMEs, exporting is a crucial choice to expand beyond domestic borders. International markets offer a broader customer base, greater revenue potential and the ability to spread risk across multiple regions. Exporting can lead to higher sales and profits because some international markets may have greater demand for goods and services from Britain, allowing companies to charge a higher price. It also provides a competitive advantage and encourages economies of scale, which can increase profitability.

Moreover, exporting can accelerate business innovation. Launching products in similar markets abroad can serve as a testing ground for innovation without risking the brand’s reputation at home. The lessons can then be applied to improve business operations in Britain.

As Britain redefines its global role post-Brexit, it is crucial that companies seize international opportunities. Exporting should not just be an option; it is a strategic imperative for small and medium-sized businesses that want to thrive in the global marketplace. With the right approach and support, the journey to exporting can lead to a world of untapped potential and prosperity.