Small businesses losing out on export opportunities

The UK is losing out on a potential £141.3 billion – more than the combined UK government budgets for health and defence in 2015/16 – because of the SME export gap, research finds.

The report, commissioned by World First, finds that only 5 per cent of UK small and medium-sized enterprises (SMEs) have plans to investigate export opportunities in the next five years.

However, by trading their goods and services internationally the typical exporting SME added over £287,000 in revenue over the last 12 months with 9 per cent of SME exporters also saying that exports had boosted their profits by more than 20 per cent.

This means that even if only the 5 per cent of UK SMEs looking to export in the next few years did so, they could add £33.7 billion to UK GDP – a 6 per cent boost to the overall level of exports from the UK economy in 2015.

While significant opportunities from exporting exist, SMEs identified a number of barriers impacting their ability to export more with language and culture proving a persistent problem. Language is labelled the top barrier by SMEs looking to enter the Asia-Pacific region (23 per cent) and South America (21 per cent), and the fourth highest barrier for Africa and the Middle East (20 per cent). Similarly, culture is named as the biggest barrier for SMEs wanting to enter Africa and the Middle East (24 per cent).

UK SMEs have reacted to the decision to leave the EU with a mixed response. When asked whether Brexit would impact their business’ ability to export, more than two fifths (42 per cent) say that it would hinder them versus only 19 per cent who say it would help them. Just over a third (35 per cent) say it would make no difference.

Export opportunities not being taken by SMEs

The analysis also shows that the UK ranks in the bottom five across European economies when it comes to the share of SMEs among exporters.

Furthermore, between 2008 and 2015, UK exports grew from $473 billion to $486 billion – an increase of around 3 per cent.

Had they grown in line with the global average, they would have been 19 per cent higher or $564 billion in 2014. Had they grown at the rate of Germany, the EU’s leading exporter, UK exports would have been 7 per cent higher or $508 billion.

Jonathan Quin, CEO and Co-Founder of World First says that the value of export opportunities to the UK economy is enormous and so much more needs to be done for the UK to fulfil its potential as a trading nation.

‘But with only 5 per cent of UK SMEs considering exporting over the next few years, it is clear that the UK’s SMEs need much more in terms of inspiration and support to seize the growth opportunities that exist in global markets.’

He adds that the creation of a government minister for scale-ups would go a long way in supporting businesses in their international development and drastically improve this figure.

Quin continues: ‘The fallout from the UK referendum has also brought about a significant amount of uncertainty for businesses but, if anything, it reinforces the importance of taking a global view and exploring new markets.

‘As the government’s Brexit negotiations take centre stage over the next few years, we would urge that SMEs are included and actively consulted throughout the process in order to ensure their views and needs are actively considered.’

Further reading on exporting

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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