The manufacturing sector leads the way in international trade aspiration, according to a new study by Albion Ventures.
Evidence of an export-led recovery is provided by the fact that one in three (34 per cent) SMEs are looking to break into new markets overseas of which 19 per cent are casting outside the EU and 15 per cent within the single market.
This is higher than the 30 per cent targeting untapped domestic markets. A further one-in-six (15 per cent) small businesses plan to grow through launching new products and improving their online services.
The third Albion Growth Report, designed to shed light on the factors that both create and impede growth among over 1,000 SMEs, shows that medium-sized companies are more likely to be looking to expand into new markets (77 per cent) than small businesses (53 per cent).
In sector terms, three quarters (75 per cent) of manufacturing firms are planning to enter new markets, the highest of any sector and also top for expansion within the EU at 28 per cent. Businesses in media, marketing and advertising (68 per cent) and IT/ telecoms (56 per cent) are second and third respectively.
Entering new markets is not without its challenges; in fact more than half (52 per cent) of firms that have taken the plunge report experiencing problems, the biggest are lack of expertise (13 per cent); too many regulatory obstacles (13 per cent); strong competition (12 per cent); and lack of demand (12 per cent).
Companies in the education sector are the most likely to encounter problems (61 per cent) when trying to enter new markets, followed by those in manufacturing and transportation and distribution (59 per cent and 57 per cent respectively).
Patrick Reeve, managing partner at Albion Ventures says the search for new markets among small businesses is gathering pace with much of the effort focused outside the UK.
‘Given the EU’s continuing economic travails, it’s of little surprise that other overseas markets are proving more popular.
‘Breaking into new markets is easier said than done and all too often small firms lack the necessary expertise to overcome established competitors,’ he adds.
On a regional basis, London-based SMEs are the most likely to enter new markets in the next two years (66 per cent) followed by those in the South West (62 per cent) and Scotland and the North East (59 per cent). Small firms in Wales are the least inclined to break into new markets with only 50 per cent planning to do so.