To celebrate Export Week, we look at how UK medium-sized businesses (MSBs) can start to address both the real and perceived barriers of growing their business abroad
UK Trade & Investment (UKTI) is holding its sixth Export Week during the week of 10-14 November, featuring seminars, workshops and market briefings aimed at helping businesses either to start their export journey or to increase their international business.
And yet one of the biggest segments of the UK economy remains reluctant to take up the baton. According to Grant Thornton’s Agents of growth research, mid-sized businesses are often slow to seize opportunities for export and international expansion, with only 29% of UK MSBs having international operations compared with 46% in Germany.
Understanding the barriers business leaders face, or perceive, is the first step in helping to unlock the full potential on the world stage. According to Grant Thornton’s survey, some of the biggest perceived major challenges to international expansion for UK mid-sized businesses include legislation and regulation, cultural and linguistic barriers, and currency fluctuations.
“MSBs have been outperforming other businesses when it comes to export growth. However many still remain apprehensive of ventures into overseas markets, fearful in particular of regulatory and cultural barriers,” says Simon Bevan, Partner, Grant Thornton UK. “Their agility actually puts them at a competitive advantage, making them very well placed to overcome those barriers and seize the opportunities in high growth markets.”
Below are five pointers from the research for mid-sized businesses wanting to address their fears and realise their international potential.
1. Look for entry points with less red tape
Legislation and regulation was perceived to be the biggest challenge to MSBs expanding overseas but it really depends where you go. The countries being strangled by red tape may not be the ones that you expect. Last year, Grant Thornton measured the Top 10 countries for business dynamism – listing markets with a more conducive business environment across a number of fronts. Emerging economies such as Chile and China made the top three.
Another option may be to base yourself in an enterprise zone or free trade zone (FTZ) within your chosen market. In China, for example, there is an active push to reduce the regulatory and legal barriers by setting up free trade zones, which lower the barriers to entry and offer a logical first step for setting up overseas.
2. Take advantage of increased government support
The UKTI has pledged to boost support for 8,990 businesses that it defines as mid-sized. Seek out export finance support and advice through UK Export Finance (UKEF).
Another initiative is the commitment, in partnership with the British Chambers of Commerce, to expand support abroad through business centres and to increase help from consuls. There are now British Chambers in 41 countries that can provide assistance for exporters, with the latest opening recently in Thailand.
3. Find a business mentor
As part of Grant Thornton’s Agents of growth campaign for mid-sized businesses, it recommended that the UK government’s Department for Business, Innovation and Skills explores incentivising corporate mentoring schemes: this would involve large corporates with significant international reach providing coaching and access to networks to support smaller, non-competing companies.
4. Explore beyond the EU
Explore exports to the higher-growth markets beyond Western Europe. The vast majority of those MSBs looking to expand internationally tend to be focused on Western Europe and North American markets. For potentially greater reward, tap into UKTI trade delegations to higher growth emerging markets, and delve into our growing list of dynamic markets profiles to familiarise yourself with potential new markets and their business and cultural rules.
Consider hiring in-country specialists or joining up with an overseas partner to ease worries about breaking into a totally new market.
5. Explore financing options
Access to finance was perceived to be a challenge for many medium-sized companies in funding international expansion. At a time when the costs of additional debt are low, the report recommends MSB leaders consider increasing their debt levels to fund acquisitions and fuel faster growth or larger market share, where appropriate. If you have a potential contract opportunity overseas, UKEF may offer a useful way to help you bridge the funding gap.
More on MSBs
Download Grant Thornton’s Agents of growth report to find out more about this important segment of the UK economy, and the particular challenges mid-sized businesses face. A recent round table also raised concerns over export issues with UKTI: read more on the meeting with Lord Livingston here.