Small businesses account for over 99 per cent of UK private sector businesses. There are some 5.6 million of them. But not enough of them export anything despite the very great deal of information, advice and assistance available to potential exporters. Why? How can we persuade and facilitate more small businesses to become exporters?
Resources for aiding exports
I welcome the announcement in last week’s Spring Statement that UK Export Finance will introduce a new General Export Facility and launch a consultation on UKEF’s foreign content policy. It will be encouraging to small business that the proposed changes will recognise the full contribution of the UK supply chain and that a wider range of exporters will gain access to UKEF support.
But I hope the Treasury will look even more favourably on the DIT at the next spending review. It is absolutely vital that the resources are there to engage the local businesses of Global Britain in the dynamic potential of the United Kingdom to be a great trading nation of the twenty-first century outside of the EU.
The rewards from increasing our export success are such that a bit more spending – rigorously targeted of course – will soon more than pay for itself through duties if more firms become confident exporters, seeking markets that are opened up by the ambitious free trade agreements that the DIT will deliver. Indeed, what would be the point of delivering those free trade agreements if we did not have exporters eager to take advantage of them?
The Export Strategy
Under the Industrial Strategy, the Government has an Export Strategy, which is subtitled: “supporting and connecting businesses to grow on the world stage.” I am confident that that is the right ambition to have – and one of the challenges for us all in Parliament will be ensure that our local businesses are connected to it.
And it is in the spirit of positivity that I want to enthuse very small businesses that could be, but are not currently, exporting to consider doing so and engage in the programmes available to encourage and help them.
The Federation of Small Businesses has on its website an eye-opening article called “Breaking New Ground” which explores what it is that is holding potential exporters back – and, crucially, what they are missing out on.
It quotes a report by World First that found that a typical UK small business exporter generates more than £287,000 from exports per year.
The key barriers identified, though, are:
- Insufficient resource – whether staff, time, cash or product;
- Unfamiliar local customs, culture and language;
- Shipping issues. Handling, clearing and agency charges;
- Exchange rate fluctuations;
- Legislative difficulties overseas, opaque international tax rules, uncertain immigration employment laws, certificates of origin, and other red tape issues, including regulations for Base Equity Profit Shifting.
As Peter Sewell, Regional Director at Crown World Mobility, puts it: “Understanding it all takes more than a Google search.”
For sole traders and small partnerships it is easy to see how exporting might be daunting even to consider.
Larger companies have the capacity to employ staff in export markets, based in the region they can better overcome many of the challenges listed.
But for smaller companies this is often just not possible and would amount to a significant proportion of their revenues.
What I ask of the government is that the Export Strategy be fully resourced to maximise its positive effect. Global Britain’s success will be built on the success of local businesses, many of which have never exported before.
I hope those small businesses, in particular, will be the focus of the government’s efforts to support and connect businesses to grow on the world stage.
This article appeared originally on Politicshome.com, 20th March 2019.