20 June 2016

The benefits of selling overseas

What exactly the benefits of exporting? And, if you decide to looks overseas, where do you find the support you need? UK Trade & Investment’s Clive Drinkwater speaks to HSBC.

International Festival for Business 2016

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Research by Kingston University Business School suggests that many small firms don't export because they feel they are simply too small to do so, they think they don't have a suitable product or they simply don't want the extra "hassle".

Barriers to exporting

Research by Kingston University Business School suggests that many small firms don't export because they feel they are simply too small to do so, they think they don't have a suitable product or they simply don't want the extra "hassle".

"Clearly there's a fear of the unknown," concedes Clive Drinkwater, UK Trade & Investment's (UKTI) director for the north west of England. "There's fear of not getting paid. There's a fear of different cultures and languages, of having to use different currencies. There are tariffs and regulatory barriers, lack of contacts and knowledge about processes and procedures."

But the argument in favour of selling to overseas territories is compelling, he says. "With a world population of seven billion, if you limit yourself to just the UK and Northern Ireland, then you are limiting your potential market to just 0.8 per cent of the world population. It's just not a growth strategy to limit yourself that way."

The benefits of selling overseas

Pointing out that many small businesses are already "accidental" exporters via website sales to foreign customers, he says the growth of ecommerce provides a perfect platform for small firms with growth ambitions to explore overseas markets in a more purposeful way.

"Our analysis shows that international businesses are better business," Drinkwater explains. “In their first year of exporting, businesses on average receive a 34 per cent boost to their long-term, productivity.

"Those businesses that export are on average 12 per cent more likely to survive through difficult times and they are 70 per cent more innovative. Exporting creates a virtuous circle," he stresses.

"Businesses that expose themselves to the rigours of international competition become learning organisations because they have to adapt to new markets - and that flexibility also leads to better sales locally and nationally."

Getting started

While the argument may be compelling, the fear of leaping into the unknown remains. It's here that support organisations such as UKTI, Chambers of Commerce, and banks come into play. An enormous range of organisations help UK businesses to begin exporting.

"The most important support we offer is mentoring,” Drinkwater stresses. “There's evidence that businesses that take advice grow more rapidly than businesses that don't. That could just be going to your accountant or your bank and receiving advice on how you structure your business."

Perhaps the most important characteristic of a successful exporter, however, is a simple written business plan. "You'd be amazed how many small firms don't have one. But firms with a written business plan are something like 30-40% more likely to export. A plan helps you focus and to think about what you need to do to achieve your goals."

Take the leap

Despite the risks that many businesses associate with selling overseas, Drinkwater believes the benefits outweigh any other consideration. These gains, he says, extend beyond business itself.

"I loved being an exporter before I became an adviser," he admits. "It's a fantastic life. Harold MacMillan said it well in the 1950s: `Exporting is fun'. And he was right - it is. People who trade internationally and spend time with people of different cultures, with different languages and fashions, become much more interesting and rounded."

With a world population of seven billion, if you limit yourself to just the UK and Northern Ireland, then you are limiting your potential market to just 0.8 per cent of the world population

Clive Drinkwater, UKTI

Key takeaways

Key takeaways

  1. Exporting brings a fear of the unknown for small businesses but the argument for selling overseas is compelling
  2. From UKTI to Chamber of Commerce there is a lot of support available for exporters
  3. Selling overseas can help businesses become more productive and innovative

For further information about trading internationally, visit the HSBC Connections Lounge at the International Festival of Business in Liverpool where an HSBC Trade Specialist will be on hand to answer your questions or call +44 (0)800 78 31 300.

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