10 June 2015

In numbers: why it pays to export

HSBC investigate the percentages that reveal the key benefits of becoming an exporter

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The HSBC Ambitious Businesses Report, published last year, suggested that 76% of UK SMEs were actively planning for growth, with many targeting new markets at home (26%) and overseas (20%) to this end. But what key benefits does selling overseas bring?

1. Grow your business

According to UK Trade & Investment (which works with UK-based businesses to ensure their success in international markets through exports), 85% of its clients said exporting led to a level of growth not otherwise possible (source: UKTI report – Bringing home the benefits: How to grow through exporting, published in November 2013).

Last year, the British Chambers of Commerce 2014 International Trade Survey found that 61% of respondent businesses “had experienced an increase in sales within just twelve months of expanding into international markets”.

A recent survey by online export community Open to Export found that 78% of business owners and managers believe that 2015 will be better than 2014, with the most popular new markets for exports being Europe (59%) and North America (44%).

2. Spread your risk

If your business only sells in the UK and the market slows down, even temporarily, it can put the survival of your business at risk. According to the CBI (“the UK’s premier business lobbying organisation”) only one in five UK SMEs sells overseas, despite businesses being “11% more likely to survive if they export” (source: CBI). The Great British Export Report, published by Fedex last year, found that 41% of respondents “believe their trade will be mostly international in just five years’ time – rising to 57% in 15 years”.

3. Make better use of your capacity

UKTI also found that 79% of its clients said exporting had enabled them to achieve “fuller utilisation of existing capacity” (source: UKTI report Bringing home the benefits: How to grow through exporting). And SMEs that export, are 34% more productive in their first year than those that don’t sell overseas (source: UKTI/Gov.uk).

4. Enhance your reputation

Being a UK business that sells to customers at home and overseas can enhance your reputation, which can help to attract more customers. UKTI says 87% of its clients say exporting has significantly improved their profile and credibility” (source: UKTI report Bringing home the benefits: How to grow through exporting).

5. Technology is making overseas markets more accessible

UK SMEs are increasingly building relationships in new and emerging markets, as communication technologies and global logistics networks reduce barriers to trade. Of those currently selling internationally, 45% sell through their own websites, while a growing number (14%) are using online marketplaces. According to a Citrix/YouGov study published in September 2014, younger SME managers are more positive about expectations for revenue growth and expanding overseas sales. They are also pioneering new social and digital communications channels to build and maintain relationships with international business partners, highlighting the role an increasingly networked world is playing in enabling UK firms to work with international partners.

6. Become more innovative

The UKTI report also states: “Doing business overseas can not only lead directly to growth, but also to improvements in efficiency levels and to fostering ideas for new products and services.” Moreover: “70% of companies found that overseas business led to fresh ideas and innovation, upgrading their products and services” (source: UKTI report Bringing home the benefits: How to grow through exporting). This can help you to grow your domestic sales too.

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