Small businesses in the U.K. need more help to achieve their international ambitions, finds a new report by HSBC.
The bank released a new paper this month, “Exporting for Growth: The SME Perspective,” to explore how British small businesses are eying international expansion. Researchers found an array of challenges holding back small businesses from their global growth plans, however.
For instance, three quarters of small businesses that would like to begin to trade internationally said they are held back because they lack “international business experience and knowledge,” reports said. The majority admitted they have only a limited understanding of the local markets to which they would like to export, while local regulations are also baffling would-be SME exporters.
With all of these roadblocks, nearly half of SMEs surveyed by HSBC said they don’t think cross-border trade would even be important for their businesses to grow.
“Businesses often feel the resources they need can be hard to find,” summarized HSBC’s head of global trade and receivables finance in the U.K., Mark Emmerson. “Encouraging exports is a win-win for the British economy and its small businesses, so we must work together to help support SMEs take their businesses global.”
Three Ways To Help
HSBC concluded there are three paths that regulators and service providers can take to support international trade efforts of small businesses.
The first is for the government, financial services providers and other business players to reduce the red tape. While nearly all of the SMEs surveyed by HSBC said they knew there were government resources available to them to support their international ambitions, only about half said they are actually using those services.
One reason for this could be that small businesses are confused by the range and volume of services available. According to researchers, most SMEs said they would be encouraged by more custom, on-the-ground support.
Negotiations are another way that service providers can make international trade a bit easier to enter for small businesses. Researchers found that most existing small business exporters are worried that international trade taxes will increase amid an evolving global trade market. That means these businesses are worried they will lose leverage in trade negotiations.
Many small businesses also cited regulatory requirements and customs policies as challenges, with 60 percent of SMEs citing a lack of experience in trade negotiations as a top barrier to their cross-border trade goals.
HSBC concluded that government officials and service providers should be proactive in offering counsel and advice to help with trade negotiations.
Finally, researchers identified the sharing of best practices as an additional way the business and regulatory community can support small businesses exploring international trade. The report found that 71 percent of those surveyed said they are looking to learn from SMEs that are already trading internationally.
Taking The First Step
There are troves of challenges and concerns that U.K. SMEs hold when they consider bringing their business onto the international stage. But according to Emmerson, taking the first step is often the most difficult part.
“Perception is often worse than reality when it comes to exporting,” he stated. “In our experience, once they take that first step, many SMEs find that it isn’t as difficult as they had feared. What’s needed is reassurance and guidance through those early days. It is therefore vital that those already there offer a hand in crucial support, experience and advice.”
But other SME traders aren’t the only players that need to help small businesses, the executive added.
“It’s important to make sure policymakers also have access to the insight and experience that SMEs have, so they’re informed as can be when they begin trade negotiations.”