Small firms put off overseas trade by perceived barriers

Posted on Nov 28, 2011 by Evolve ecommerce websites
Tags: ecommerce, websites, exporting, small business, international trading | Comments (0)

Almost one in three small UK firms is selling to overseas customers, but many more are put off international trade by concerns about currency, payment and language, research by Lloyds TSB has found.

Of the two-thirds of small businesses not exporting, only six per cent have any plans to do so in the future. But the survey suggests more businesses would be prepared to sell internationally if they were less worried about barriers to exporting.

Problems cited by respondents included concerns about late payments and currency fluctuations, language barriers and uncertainty about expertise or resources. But these can all be overcome, said Lloyds TSB commercial spokesman Stephen Pegge.

"In the survey, 39 per cent of respondents who do not export said that there would not be demand for their product or service, and this may be true of some - for example, a hairdresser," he said.

"However, there are many small firms that are being held back by their own perceptions of what the difficulties and risks are, without thinking through how they will overcome those," Pegge continued. “Exports tend to be cloaked in jargon and it feels very high risk, but often it is easier than people think and all the perceived barriers can be addressed.”

Among the measures that could be adopted by small firms to counter their exporting fears, Pegge suggested:

• Using letters of credit, international invoice discounting and factoring to manage payments
• Covering currency risks with formal exchange contracts
• Language training
• Taking exporting training courses run by bodies such as UK Trade & Investment and British Chambers of Commerce
• Talking to the international service manager at your bank.

The measures could also benefit firms that have started to export without a clear strategy. "Many of the small businesses that export are just firms with websites that have taken orders from overseas, and they don’t necessarily see themselves as exporters," said Pegge. "In fact, they could benefit from targeting certain markets and having information on their website in another language."

UK Trade & Investment (UKTI) spokesman Jamie Oliver said that although it takes effort for small firms to export, those that do so tend to be more profitable.

"The UK is a small island with a relatively small population, so to ensure long-term growth, firms should at least research their opportunities overseas," he said. “UKTI runs courses where you can work out whether it’s worth trying to export. We also offer grants and support in terms of trade shows, to dip your toe in overseas markets.

"Businesses should take a chance and not be put off by perceived barriers, as exporting is potentially profitable," he added.