The Commonwealth Heads of Government Meeting, which took place in London this April, was a welcome break for anyone suffering from Brexit fatigue. This was the first time Britain has hosted the summit for over 20 years. Leaders from around the world coming together to celebrate shared values and plan for the future – what could be a better example of Britain’s continued global relevance?
Despite a continued lack of clarity over what an eventual UK-EU deal might look like, there are signs that key terms of Brexit might be slowly taking shape. But we may still be a long way from the UK finalising relationships with its many trading partners around the world. I believe that despite this uncertainty, Britain’s SMEs could be in a great position to strike new deals and increase growth through exporting – not just to EU countries, but in territories beyond the EU.
In the UK, SMEs account for over 99% of businesses and around 60% of private-sector employment . But in a recent Growth Street survey of more than 1,000 UK businesses, just a third of respondents said that their businesses exported goods and/or services. So how can we boost businesses’ understanding of the potential of exports? And can global organisations like the Commonwealth contribute to boosting SMEs’ international trade?
SMEs focusing on the domestic UK market, rather than looking further afield, could be partly responsible for the UK lagging behind its target of hitting £1 trillion of exports per year by 2020 . And analysis shows that in 2015, Commonwealth countries made up just 9% of the UK’s total exports. Commonwealth economies like India and Bangladesh are some of the fastest-growing emerging markets anywhere in the world. To me, it makes sense for ambitious UK businesses to focus on opportunities in booming countries with such close geopolitical links.
There are so many great reasons for businesses to begin exporting. Just a couple of these include the potential benefits of broadening global networks, and diversifying risk away from one particular market or a couple of large customers. With 53 members of the Commonwealth, there are immense opportunities for businesses to both mitigate domestic risks and diversify through forging profitable relationships with new global partners.
I’ve found that SMEs can be hesitant about expanding into cross-border trade if they aren’t aware of the funding options which could be available to them. Working capital can be important when building new business relationships, but Growth Street’s recent research found that 70% of the UK’s SMEs have never considered accessing funding anywhere but their bank.
At Growth Street, we’ve seen that taking a business to the next level can sometimes be hampered by a lack of guidance from traditional lenders. When we asked our survey respondents whether they’d know where to go were they to require funding to fuel exports, under 30% of respondents said ‘Yes’. I think there needs to be more effort on the part of finance providers to give businesses the right guidance when they are looking to expand.
I hope that the Commonwealth Heads of Government Meeting can play a role in motivating UK business owners in the UK to seek out new routes to growth. The UK has a long and illustrious history of trading throughout the world, but businesses could always benefit from more guidance when it comes to getting started. There is much more we can do, but I’m excited to see how finance providers can help kickstart a new era of trading by encouraging businesses to think global.
Greg Carter, CEO, Growth Street
(Growth Street’s flagship business finance product is GrowthLine. Designed to work much like an overdraft, GrowthLine lets businesses draw down funds and make repayments as often as they like within their limit. To learn more, visit growthstreet.co.uk/growthline.)