International trade has never been easier. Perceived barriers are more than ever just that, perceived, not real. ‘The demand is out there’ for sure, and British quality is a key selling point. Only confidence is missing and with the right help and support, that too is now on hand for those with the ambition to try.
Trade between countries has existed for centuries and today, in a context of negotiations and agreements, embargoes and sanctions, international trade seems to have an omnipresent place in the economic headlines.
But such headlines support a common misconception; that today, international trade is too geo-political or for big business, multi-national manufacturers and global brand owners.
Clearly, here in the UK, the likes of BAE Systems, Unilever, BP, GlaxoSmithKline and the government’s apparent darling Jaguar Land Rover have an essential role to play in facilitating trade flows between Britain and the rest of the world, but so do the thousands of smaller businesses that make up their supply chains.
These smaller, more agile businesses, are equally vital to the economy (perhaps even more so); further buying and selling goods and services, creating jobs and security, training employees, stimulating economic growth and generating huge social benefits for their local communities across the country.
But even more important to the nation’s economy now is motivating the millions of businesses not internationally active, to be so.
Digital technology is helping. Today, at the click of a mouse or the swipe of a tablet, SMEs have access to business and consumer markets across the world. But the ability to reach out to new customers and clients (or be found by them) using technology, is not by itself advantageous for smaller businesses and, in many ways, can be dangerously deceptive – too easy.
The desire to target new markets or find new suppliers must be coupled with the ability to finance and transact the business it can generate, and ultimately to physically deliver the goods and services, not to mention get paid for them. Of course, not every SME is a business suited to trading internationally. There is a clear distinction between a business that has the desire to trade across international borders in search of growth, and one with a business proposition suited to doing so. This first fundamental ‘barrier’ is the one most often fallen over; businesses thinking they have something they can sell internationally, but haven’t, or more often, thinking they don’t when they do!
And as a result, we know that more SMEs see their domestic market as the best source of growth than an international one. A fact borne out in a recent survey. But why?
We already know most SMEs that are suited to but don’t yet undertake international trade, are reluctant to do so because they see the barriers and threats as too great to overcome. For them, the perceived risks of testing a new market clearly outweigh the potential benefits, and the barriers they see are manifested in several guises.
While there are a range of location-specific factors such as time zones, cultural nuances, border regulations, legal practices, language, there are also a set of universal challenges that transcend simple geography. SME owners identify such lofty issues as the geo-political situation, exchange rates, Brexit and conflict, war or terrorism as three key areas threatening global growth now.
In relation to their own business though the barriers get more specific and more manageable. Almost half (49%) see a shortage of skilled staff as the greatest challenge, followed by costs and government red tape. While not specific to businesses looking to trade internationally, such challenges are often the key drivers behind business owners retaining their focus on domestic markets only.
In its 2016 report entitled ‘Levelling the Trading Field for SMEs’, the WTO found that a lack of, or insufficient access to, finance can strongly inhibit SME development of international trade; access to specialist working capital can often be the difference between business survival and growth or the transition from national to international business.
There are clearly some persistent obstacles preventing many of our SMEs from importing or exporting, or simply collaborating internationally. But what is also clear is that when SMEs have the right support at their disposal, be it financial, technological or informational, there are opportunities available for them to explore beyond their own shores.
We can’t do anything about geo-politics, Brexit negotiations or wars around the world, but we can do something about the issues of skills, costs and government red-tape that are stopping SMEs from embarking on an international trade journey by taking them out of the equation when weighing up the pros and cons. SMEs now have a zero-cost source of specialist knowledge, independent of government influence at their disposal through UK International Trade Service (UKITS).
UKITS is a new not-for-profit, privately funded public service. An organisation set up by business people for business people. It can povide the knowledge, skills and services SMEs in particular need to turn their international ambitions into practice, and the support it provides, project management and mentoring throughout the process are free. Complementing the resources of the government services available, UK SMEs now have everything they need to make a success of international trade.
Information sources: Biddy Financial Services, World Trade Organisation.