smallbusiness.co.uk: Helping your business think big

Over the past few months, the significance of looking to international markets has been drummed home to small business owners.

According to recent research by HSBC, the number of UK SMEs that expect the majority of their turnover to come from international trade is set to more than double (from 5 per cent to 12 per cent) by 2021.

Further research by the Institute of Chartered Accountants in England and Wales shows that businesses that export are more likely to report that turnover and profit increased over the last year, compared to those that do not. The UKTI website enthuses that there has ‘never been a better time to trade internationally’.

Two years ago, when I interviewed Hamilton Bradshaw CEO James Caan, the former Dragons’ Den investor seemed at a loss when I asked him what Britain can offer the world today. The status of London as a leader in financial services had passed, he said. While the ‘shop window’ of India had outsourcing, China manufacturing and the US technology, Britain’s display was looking distinctly and depressingly bare.

With this in mind, the bullish international trade drive we are seeing now is promising for a country without much of a universally recognised export identity. According to the HSBC study, businesses within the electronics and computers, travel and transport and agriculture sectors are the most likely to equip themselves for international trade growth. Reasons to export are identified as seeking a broader customer base, taking an opportunity to spread business risk, and to take advantage of ‘buoyant international markets’.

But while it seems 'de rigueur' to aim global, if you’re just starting out in business, you shouldn’t feel obliged to shoot for international climes straight away. Simply the process of starting up, winning customers and marketing your venture is hard work enough without dealing with the added stress of having to contend with issues such as foreign rules and regulations, hiring international agents, and language barriers.

Case in point: this week’s Rising Star Daniel Thomas started his hot tub retail business in 2006, and quickly looked to the French market for that much-vaunted international customer base. But he found that, as a small company, servicing the market was becoming increasingly difficult, with the need to introduce France-specific systems including new networks of engineers, delivery contracts and relationships with tradesmen, all of which took a lot of time and effort.

He says, ‘Over time these changes ate away at our margins and we ended up barely covering our French overheads. The time and stress it took to keep things on track in France simply wasn’t worth it.’

That’s not to say Thomas’ business isn’t suited to international trade, just that it may have been too soon in the company’s story to pursue it – an example worth noting for start-ups feeling pressurised into expanding their horizons before such horizons have even been established.

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