24 October 2017

Micro-multinationals – the real winners from Brexit?

As the UK broadens its international trade horizons, will micro-multinationals reap the rewards? We consider the opportunities and what needs to happen to allow businesses of all sizes to grasp them.

By Alison McGregor

CEO HSBC Scotland

There is a type of business out there for which Brexit and the protracted negotiations surrounding it, are of no material interest. Such businesses can ride wave after wave of uncertainty at home. They see opportunities in markets well beyond our shores. Indeed, they may not sell to the UK market at all, despite being based here. These are the 'micro-multinationals', and it's time we took them seriously.

The strengths of micro-multis

So called 'micro-multis' have four key traits:

  • A global mind-set
  • Agility
  • A niche offering – of an idea or just one element of a good or service
  • Tech-savvy.

The model that says big business exports and small business does not, is an anachronism, yet it is so entrenched that we are suffocating opportunity. There are exceptions, of course, the Skyscanner, Femcare and Goodman Massons, but barriers do remain. A systemic review of how businesses view the international marketplace is long overdue.

A systemic review of how businesses view the international marketplace is long overdue.

Pushing through the barriers

Small and medium-sized businesses are critical to our economy and serve as a pipeline to future economic growth. And yet, according to the Government's most recent Small Business Survey (2016), only 18 per cent of SME employers had exported goods or services in the previous 12 months1. Even more worrying are the results of a survey by the Federation of Small Businesses, which found 54 per cent of small businesses would not consider exporting2.

Micro-multis are challenging these perceptions and the traditional way of doing things – many are born global or begin exporting soon after inception, so international trade is in their DNA. The old ways of growing organically or by dominating your domestic market first are being swept away.

The old ways of growing organically or by dominating your domestic market first are being swept away.

Supporting new opportunities

Government support to help businesses seize these opportunities is crucial. Whether it's helping businesses that manufacture in China and distribute their products from there to the rest of the world, or supporting digital innovators and disruptive technology businesses. We need to accept that being a British business does not mean you have to do all, or even a majority of, your business in Britain.

Moving the dial will not be easy. Nor is it purely an issue facing small businesses. Lots of mid-sized businesses have never scaled up beyond what their domestic market will allow them to. Breaking through international barriers is no mean feat for a well-established organisation with legacy systems in place and infrastructure to manage.

We need to accept that being a British business does not mean you have to do all, or even a majority of, your business in Britain.

Seizing the moment

Smaller businesses and start-ups will find the transition more natural. They can be more efficient at exploring opportunities overseas and benefit from the reach and influence of social media and digital tools. Edinburgh-based baby retailer, Cheeky Chompers, allows customers to buy in euros, dollars or pounds on its website, and has grown by 35 per cent in just three years, with exports making up 70 per cent of sales.

More established businesses needn't be left behind. Peak Scientific, for example, had served the UK market for some 20 years before an aggressive expansion policy saw it open 16 international offices with operations in more than 20 countries.

Whatever your business size or background, now is the time to act. With the UK seeking our new trade international trade partners, the right support could fuel economic growth.

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