International trade is a key ingredient of fast growth, as IoD members know – 56 per cent export compared with a national average of 19 per cent for small and mid-sized firms. Santander helps SMEs to market their products and services abroad through its innovative Breakthrough programme. Here’s how…
Small and mid-sized companies have emerged as the heroes of the British economy over the past five years. Numbers of start-ups are at a record high and, importantly, ambitious scale-up firms continue to fuel growth and boost job numbers. But many SMEs still operate on a domestic level and could accelerate their growth even further, and faster, if they broke into global markets. According to government figures, only 19 per cent of SMEs in the UK export.
Diversification through exporting is a strong strategy. What’s more, once companies start to export, they become more optimistic about their prospects. Research from Santander, conducted in 2013, shows that 92 per cent of SMEs which exported were confident that their business would grow in the year ahead.
Data from HM Revenue & Customs shows that UK goods and services worth £12.5bn were exported to EU countries in September 2014 alone, a rise of £1.9bn on the previous month. Exports to Germany and the Netherlands – Britain’s two biggest EU trading partners – were up more than 15 per cent, and trade to France (the third biggest European export market) rose by 11 per cent. This highlights a stable export market offering real opportunity for ambitious firms.
Operating internationally requires investment in time and resources, but the benefits are obvious, not least for establishing new sales channels, brand reach and greater perceived value.
For many SMEs, though, going global can seem an insurmountable challenge, with perceived barriers around tax, currencies and trading laws, in addition to the hurdles of language and culture. So what are the key factors to consider when looking beyond the UK, and how can you make sure you get it right?
Challenges and choices
Many SMEs are time-poor and taking a business global is a complex decision that cannot be made overnight. Fear of the unknown and the prospect of large investments may prevent companies from exporting, but these concerns can be overcome. Picking the right market is the first, and most important, decision to make. Understanding where sales will come from, how logistics will work, and the impact of wider geo-political factors will all play a role in choosing a market. Once this has been established, use available resources to assess export activity in the region. If no other SMEs are sending goods successfully, consider why. Are other businesses operating under the same name abroad?
Language and cultural barriers can be challenging. Even simple considerations, such as whether your brand name will translate well into the language of your target market, need to be weighed up. US carmaker Chevrolet’s attempts to take its Nova model overseas stalled when it failed to realise that ‘no va’ means ‘it doesn’t go’ or ‘it won’t go’ in Spanish.
What’s more, how business is conducted, from China to the UAE, varies dramatically and being sensitive to this geographical diversity can mean the difference between success and failure. Success relies on strong networks and trusted connections on the ground.
Among the biggest barriers faced by SMEs are understanding new legal frameworks, tax obligations, foreign exchange implications, and how to get paid. Some SMEs start trading with overseas customers without first understanding the mechanics of how they will be paid and how local laws will work in practice.
How Breakthrough can help
The key to successful exporting is thorough research. Even understanding where to start can be challenging, but there is a huge amount of support and advice available. Santander’s award-winning set of International Solutions supports the export journey of thousands of fast-growth SMEs in a variety of ways:
· The Santander Trade Portal
Santander’s market-leading online resource offers easily accessible market knowledge to help you define and refine your international growth strategy at every stage of the international journey. You can access:
• Market analysis to help you find the countries with the highest demand for your product
• Trade information for 185 countries
– including everything from best practices to local tax and legal requirements
• up-to-date, detailed analysis on imports and exports
• over 190,000 importers in some of the world’s leading markets, together with the contact details of potential buyers
• over one million public and private tender opportunities
• a database of more than 40,000 trade shows, organised by sector, to help you plan overseas trips.
· International roundtable events
This year, Santander will be helping thousands of SMEs from across the UK through its internationally focused roundtables. So once the best market for your product has been identified, you can learn more about the market itself and receive first-hand advice from the bank’s country specialists and network of partners, as well as share experiences and learn from a network of peers.
· The Santander Trade Club
The Santander Trade Club is an online global community of businesses which are all customers across the Santander footprint. The Club allows companies to find potential new business partners, share ideas and contacts, and access a series of country and sector-specific webinars hosted by the Santander Group and its partners.
· Trade missions
Santander offers access to some of the world’s most promising markets through our subsidised trade missions. As places are limited, businesses must be highly ambitious, have been trading for more than two years, and have an ambitious growth strategy. Candidates visit markets offering high-growth potential (recent examples include trips to Mexico, Brazil, the US and the UAE) and cover a tailored programme of meetings, networking events and seminars.
· International contacts
Santander operates an International Desk Network in each of the group’s core markets. Through its multilingual teams, the desk network provides on-the-ground assistance, expert knowledge and valuable insight into the local macro-economic, financial, regulatory and business environment of your chosen market. Santander also announced a partnership with UKTI in March, which will help to break down some of the barriers that UK companies can face when moving their business onto the world stage, by offering them access to expert support, financial and practical assistance, and an unrivalled network of international contacts.
To establish connections needed to succeed in new markets, one of the main resources for wide-ranging support is the British Chambers of Commerce (BCC). Similarly, UK Trade & Investment (UKTI) can offer advice on market access. It runs both free and paid-for initiatives, including support for SMEs attending trade shows and country-specific market analysis. To overcome hurdles around brand protection, the Intellectual Property Office – part of the Department for Business, Innovation and Skills – offers information on design, patent and trademark protection, as well as a paid-for trademark search service. Armed with the necessary support and advice, ambitious SMEs should not let fear or uncertainty stop them expanding overseas. The opportunities are vast for those willing and able to commit time and resources to appropriate planning, and services such as those provided by Santander, the BCC and UKTI are paving the way to success.
For further information, visit santandercb.co.uk/breakthrough