How To Do Business Around The World
SMEs are missing out on billions of pounds in export sales so how can they exploit overseas markets?
3 min read
The UK’s small and medium-sized enterprises (SMEs) are missing out on £141.3bn in overseas sales, according to a report by the Centre for Economic and Business Research (CEBR).
Although there are uncertainties around a post-Brexit trade deal many of the most exciting opportunities lie further afield in places like Africa and Asia.
Geoff de Mowbray, Co-Chairman of the British Exporters Association, says that the opportunities are enormous for those able to overcome the challenges of penetrating new markets. Africa, for example, now has a middle-class of 74 million people who are interested in consumer goods ranging from Paul Smith suits to Scotch
But while the rewards of exporting can be great there are challenges that have to be overcome; exporting can be costly, the markets are unfamiliar and SMEs may need to identify local partners to work with. Nevertheless with the CEBR research, carried out on behalf of World First, finding that companies received, on average, £287,000 of additional revenue each year from exporting the extra effort can be well worthwhile.
The first step that entrepreneurs should take is to identify where there are markets for their products, explains Geoff. While there is data available from sources like the Exporting is Great website and organisations such as the chambers of commerce and the Department of International Trade, he feels that it can be hard to translate into information that is useful for SMEs.
“A statistic I saw recently was that something like 60% of UK SMEs don’t believe there is demand for their products abroad,” says Geoff. “I think that’s down to a lack of information and of giving companies straightforward guidance, which should be as simple as saying – to take a wild example – ‘yes, people in Cameroon do like elderflower cordial’.
“The most important research you can do is to jump on a plane and visit potential markets yourself. It is much easier to go to the European Union, the US or somewhere else that is familiar but those aren’t necessarily where the opportunities are today. We need to get people comfortable with going to more far flung places.”
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Geoff is no stranger to these markets, having started his own entrepreneurial career at the age of 18 by exporting refurbished computers from the UK to schools in Cameroon. He is the founder and CEO of Dints International, a Coutts client which provides supply chain solutions to the mining and construction industries and makes all of its £11m revenue from overseas trade, largely with Africa.
Once a market has been identified and a potential customer found, he says that it is important to sort out export finance. Some banks don’t understand the requirements of SME exporters and a lot of financial instruments for international trade, such as letters of credit, have been around a long time. They were created for a less complex global environment and require specialist expertise to avoid costly errors, says Geoff.
But while there may be challenges he says that many people overseas like dealing with British companies and there are particular opportunities in sectors like high-tech manufacturing,
Entrepreneurs are missing out on billions in overseas sales and many of the most exciting opportunities are in far flung parts of the world. It may be time to jump on a plane and check out potential markets in Africa and Asia.
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