What UK startups need to know about exporting
Exporting can be an amazing opportunity for your business, opening up new markets and broadening horizons. It can be daunting to get started, but there's never been more support to get on your way, if you know where to find it. From workshops, sessions with advisors, webinars and opportunities, the stepping stones are there to get businesses going global.
Philip Salter is the director of The Entrepreneurs Network, a partner of UKTI's initiative Exporting is GREAT. Here's his view on what opportunities exporting holds for UK businesses, why we're one of the best-placed countries to become a nation of exporters, and how small businesses and startups can access the support available to get them exporting.
First, the bad news. For a traditionally great trading nation, these days Britain punches below its weight when it comes to exporting. UK exports of goods and services were only £515bn in 2015 (despite ambitions to export £1 trillion by 2020), with a lower percentage of British businesses exporting than our competitors in France, Germany or Italy. And those that do sell less, and are more likely to give up.
But opportunities lurk in adversity. Encouragingly, you would be hard-pressed to name a better place in Europe to start and grow a business. That’s why we are sixth in the World Bank’s prestigious Ease of Doing Business ranking, with only Denmark in Europe ahead of us. In short, we are perfectly placed for to become a nation of exporters.
On the one hand, it may be useful to know where other business owners are exporting to before devising your strategy, as you will likely find it easier to find advice and support for entering more established markets. In descending order, our main exporting nations for 2015 were the United States, Germany, Switzerland, China, France, the Netherlands, Ireland, Belgium, Spain and Italy. However, on the other hand, choosing an export market will obviously depend on the nature of your business.
Getting advice can be tricky. It has been calculated that poor professional advice from third parties and consultants has resulted in one in six small firms losing money in the last year, at a total cost of £6.4bn.
So where should internationally ambitious entrepreneurs turn to for advice? It can help to speak with fellow entrepreneurs. At our free events we regularly see entrepreneurs us their own contacts to help their contemporaries begin trading in new markets. But for those looking advice outside their current network, the best place to start is probably the Exporting is GREAT website. Besides hosting real-time opportunities you’ll find information about Exporting is GREAT Week – which runs from 18-22 April – and the Exporting is GREAT Hub touring the country.
UKTI also runs the E-Exporting Programme, which can help you sell online – whether you're just starting or looking to expand to new platforms. Also, get in touch with your local Chamber of Commerce through their Export Britain site and the British Exporters Association may be helpful.
UK Export Finance can help UK exporters by: insuring UK exporters against non-payment by their overseas buyers; guaranteeing or funding bank loans to finance the purchases; sharing credit risks with banks; and insuring UK investors in overseas markets against political risks. (The ICAEW has put together a guide to trade finance and credit insurance for anyone new to this issue.) Exporters may also want to consider registering a European Union Trade Mark to help protect their brand.
Currency volatility is a serious risk to trading successfully overseas. Currency fluctuations could plunge a profitable contract into the red overnight. If you don’t hedge your exposure, you’re effectively gambling on the foreign exchange market; something most entrepreneurs – who are more risk averse than the general population – would usually steer clear of. The good news is that the UK is extremely competitive in financial services, so there are plenty of forex companies that help manage exposure to forex risk.
Businesses who export grow almost 60 % faster than those that don’t. This doesn’t mean your business is at the stage where you should export, but it's something to always bear in mind. Otherwise, you could be missing out on the benefits of selling to the world.