- Fresh data shows many small firms would consider exporting in future
- Personal interactions with trade experts among the most valuable support to help SMEs start or increase exporting
- Lowering the turnover threshold of bespoke government support could reach more prospective small exporters
Over a third of UK non-exporter SMEs would consider selling to overseas markets in future, with the smallest businesses showing greater interests in international trade, according to new research by the Federation of Small Businesses.
The UK’s largest business group said boosting SME exports must be a central part of the Government’s new growth plan.
FSB’s Ready to Dispatch report found that over a third (35%) of non-exporting small firms would consider doing so in future. Some 38 per cent of non-exporting microbusinesses (with under 10 employees) said they would consider exporting, compared to that that of 20 per cent of businesses with 10-49 employees.
The most beneficial tool to help prospective small exporters explore entry to a new market is general information on how to start exporting (41%), followed by target market information (37%) and financial support for specific activities such as tradeshows, translation (34%).
Near half (49%) of current and would-be small exporters said understanding of regulatory requirements in target markets would improve their competitiveness in overseas markets. Over four in ten (42%) referred to lower delivery costs, while 36 per cent cited tailoring product/service to target market.
Half of those exporting and considerers said sector-specific support would be the most valuable to help begin or increase exporting; Four in ten (44%) said they would look for support specific to target market; 37 per cent believed personal interactions with trade experts would make a difference.
Bespoke government export support allows free access to UK-based International Trade Advisors and in-market Trade Advisors to help businesses develop their own export strategy.
The current turnover threshold of such services is set at £500,000. But data from Department for Business and Trade Department shows that a majority of small employers (61%) and sole traders (91%) had a turnover of below £500,000
FSB therefore suggests the DBT should reduce the turnover threshold of one-to-one export support to £400,000 and develop new tailored services for start-ups to encourage more small firms to trade internationally or consider it from day one.
Earlier this week, FSB took a group of its members to No.11 to discuss with the Chancellor on ways to unlock export growth within the small business community.
FSB Policy Chair Tina McKenzie said:
“You cannot get GDP growth without powering up small business exports. The untapped export potential within the small business community is immense but also provides the perfect ingredients to kick start wealth creation, supercharging measures in the Government’s refreshed pro-growth across public policy. This will need a real focus within the upcoming Trade Strategy White Paper and the Spending Review in June.
“Small firms that export tend to be the most profitable and innovative businesses. Our research shows clearly the big ambitions of small businesses – especially the smallest ones with the fewest resources – to grow overseas.
“While strengthening relationships with key trading partners such as the US and the EU, restarting Free Trade Agreements talk with India, and better connections to emerging markets through airport expansion are all welcomed measures, there is a group of aspiring small exporters hoping to enjoy the benefits as these commitments get materialised in future – all they need is a springboard to new markets.
“Our members tell us better government export support will enable them to get their foot in exporting, and they most value tailored help. Allowing start-ups and the smallest businesses to access to bespoke support will help grow our export and the overall economy.
“The UK and EU must also look to address the unintended consequences of the Trade and Cooperation Agreement on small business and remove unnecessary trade barriers in the upcoming review in 2026.”
Other pro-export growth measures proposed by FSB include:
The Export Minister should:
- Request an annual public report on progress made by UK Export Finance toward the target of supporting 1,000 small businesses a year by 2029. The report should identify and propose solutions to close gaps in UKEF’s provision for SMEs.
The Department for Business and Trade should:
- Work with partners to include references to exporting in early-stage and start-up business resources and deliver better cross-referencing and signposting between government programmes.
- Work with partners such as the British Business Bank and King’s Trust to include references to exporting/international trade in their ‘starting a business’ resources, including start-up loans and business plan templates, to encourage SMEs to see exports as an integral part of business growth.
- Deliver an export development grant scheme modelled on Australian and Canadian funding programmes that allows microbusinesses to claim up to £2,000 per year for a defined range of business development activities
UK Export Finance should:
- Renew the 2023 Partnership Agreement with DBT to reflect the export targets of the new government and to prioritise cross-departmental working in the development and delivery of export finance to SMEs.
ENDS
Notes to editors
- The survey was conducted by the research agency Verve between 15 November and 11 December 2023. A total of 715 small businesses was polled.
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About FSB
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.