Data provided by market researchers Statista.com indicates that between 11% and 20% of the UK’s SMEs are trading internationally. The survey in question covers the period February 2016 and January 2018 and defines ‘international trade’ as the import or export of goods. If we were to include the use of international contractors such as remotely-based IT experts that figure would be expected to be much higher. The Federation of Small Businesses puts the percentage of companies trading internationally higher, at 21% and suggests e-commerce is the fastest growing market for our SMEs trading internationally.
The UK government strongly believes there are also far more British SMEs that should be exporting and trading internationally and are throwing resources behind encouraging them to do so.
Optimising business processes to represent best practice is key to the success of any business and especially vital to SMEs. Trading internationally is no different. International markets offer huge potential for growth in turnover and profits. If your business offers a more niche product or service effectively accessing that market is likely to be even more key to growth prospects.
So what are the best practice pillars a UK SME should ensure are in place to maximise the benefits of international trade? Here’s a helpful check list you can refer to covering government resources and funding to effective currency management.
Make sure you lay the groundwork for successful international trade by fully researching requirements, markets and opportunities. We’ll mention below the key areas you can focus research on but as with any new business venture, initiative and thoroughness will be key. Use the best practice pointers below as a starting point and do your own additional research.
Little things like making sure you are aware of norms such as who pays for shipping etc., which can differ from country to country for different industries, can make all the difference and help avoid hiccups.
As already mentioned, the UK government has thrown its weight behind enabling the UK’s SMEs to optimise their potential for international trade. Services provided, mostly free of charge or against very modest administration fees, include:
Here are the main points of contact and what they help with:
UK Trade and Investment (UKTI) provides a Passport to Export Service which offers an audit of a company’s readiness to trade internationally and an action plan on what to improve or implement. The Gateway to Global Growth service caters to companies already exporting, helping them expand into new overseas markets through tailored support over a 12-month period. The Export Communication Review focuses on helping SMEs engaged in international trade overcome the cultural and language barriers they may encounter.
The new ‘Exporting is Great’ resource has also been set up to provide support to first time exporters.
UK Export Finance (UKEF) provides valuable finance and insurance resources to help smooth the path for SMEs exporting. Companies can apply for financing terms for their clients, forward-funded by UKEF, helping to increase competitiveness. Working capital can also be applied for if required to fill significant export orders as well as insurance against non-payment.
A variety of grants are also available through GREAT and UKEF for export-related marketing projects such as translating your company’s website or brochures etc. into other languages. Your points of contact at government agencies will probably inform you of grants and financial support potentially available to you but also don’t be afraid to ask.
A strong business network is important to doing business successfully anywhere and trading internationally is no different. The UK government again provides support here through the UKTI Tradeshow Access Programme. Grants to support participation in international tradeshows are available.
As well as tradeshows, social media can be an excellent way to gather contacts and make connections. As a professional social media, LinkedIn may seem the obvious ‘go to’ but more ‘social’ platforms such as Facebook should not be dismissed. There are often strong groups for expats or business communities based in countries you may be interested in doing business in. These can be great as a source of valuable information, networking or even possibly partnership building.
While the online space is invaluable, actually getting on a plane and visiting countries you are prioritising for international trade, or already have partners in, can lead to great results. You’ll get a better understanding of the local environment, strengthen existing relationships and hopefully also build new ones.
Trading internationally also inherently means cash flow in and out between different currencies. Making sure you get the optimal exchange rate for any necessary currency transfers can lead to significant savings over time and for large transactions. Professional forex exchange brokers also offer currency risk management services such as locking in exchange rates to protect against fluctuations that might take place after the terms of an international trade agreement have been signed.
P2P services that offer far better exchange rates than banks for forex transfers have appeared in recent years. However, for exchange requirements of over several thousand pounds, or for those that would benefit from currency risk management facilities, forex brokers specialised in business transactions often offer the optimal solution.