A third of UK SMEs plan to trade internationally
A third (32%) of UK SMEs that do not currently trade internationally plan to do so this year, according to research from Shawbrook.
While 38% of SMEs are already trading outside of the UK, a further third now plan to begin doing so within the next year. Only 28% do not currently trade internationally nor have any plans to do so.
Larger businesses are more likely to expand internationally compared to smaller SMEs. Among firms with a turnover between £100m and £500m, 38% plan to begin trading abroad, compared to just 22% of those with a turnover between £1m and £5m. This suggests it’s easier for businesses with a larger workforce and stronger financial backing to make the leap.
For those planning to do business abroad, Europe is the most prominent destination. Of the companies intending to expand overseas, 80% are targeting Europe, followed by 38% eyeing North America and 33% looking to move into the Asian market. Interest drops to 21% for South America, and 18% each for Africa and Australasia.
Neil Rudge, chief banking officer at Shawbrook, commented: “A perfect storm of business challenges in the UK has opened the door for a large proportion of SMEs to expand into international markets.
“71% of SMEs have experienced growth over the past year, equipping them with the confidence and financial footing to take the next step and explore expansion beyond the UK. While this is encouraging, a cocktail of challenges currently facing UK businesses is also likely a contributing factor. Rising National Insurance contributions and high business rates will be weighing heavily on the minds of business owners, many of whom may be looking to other markets to ease the effects of domestic economic headwinds.
“While it’s positive to see SMEs with the confidence and capability to expand internationally, it’s important they do so to complement their UK operations – not replace them. The government must ensure the right incentives are in place for SMEs to continue growing here at home. Many will be looking to the Autumn Budget in the hope that more support will be offered to enable prosperity and opportunity.’