By Martin Davidian, Managing Director Sales UK & Ireland, FedEx Express
Small to medium sized enterprises (SMEs) are making a positive contribution to narrowing the UK trade deficit. While the overall deficit stands at around £2.8million[1], the second annual FedEx Great British Export Report 2015 has revealed British SMEs are helping to counteract this.
A key finding from the FedEx Great British Export Report is that the financial value of exports exceeds that of imports for British SMEs:
• The average SME exports £553k a year to Europe and imports £535k, an average net surplus of c£18k for those SMEs exporting to Europe
• The average SME exports £714k a year outside of Europe but imports just £410k, an average net benefit of c£304k for those SMEs exporting globally.
As concerns grow over an ever widening trade deficit, British SMEs have become a driving force in improving the economy, and their exporting success will certainly be welcome news in the current economic climate.
Why British SMEs are more likely to export than import
SMEs have always been in a position to act dynamically, and to seize opportunities quickly. Just 0.88% of the world’s population is in the UK, and SMEs are switched on to the opportunities that exist in the remaining 99%[2]. From the FedEx Great British Export Report 2015, it is clear that smaller businesses feel confident about the future. In five years’ time, 50% of British SMEs believe their trade will be both domestic and international – only 28% believe it will be domestic only, while 8% believe it will be international only.
The rise in SME exporting behaviour
There are a number of factors contributing to the increase of SMEs exporting in recent years. Firstly, more SMEs are recognising the value of exports to driving revenue growth. Last year 43% of SMEs in Great Britain exported more than £5,000 per month and that has risen to 64% in 2015.This just goes to show how quickly exporting can grow a business. On top of this, the rise of eCommerce has meant the world is growing closer together. For instance, the internet allows businesses to research and tap into new markets with unprecedented ease.
At FedEx Express we work with businesses who have never exported, and who come to us looking for support and guidance. What we’re able to tell them is, with the right support from an expert logistics provider, exporting can be a lot more straightforward than they think, allowing them to reap the rewards without impacting on their domestic business.
The risk to smaller businesses if they do not start exporting in the near future
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Currently, just over half of all British SMEs export – and of those that export to Europe, 69% currently export at least 20 shipments per week. However, SMEs do encounter barriers when exporting, with the top three comprising of the costs, concerns over losing out on the currency exchange and worries about being paid. While these are valid concerns, SMEs who don’t look to export could miss out on fast revenue growth and are at risk of being left behind in an increasingly connected world. With its long-standing expertise, FedEx Express can help SMEs to feel confident about doing business globally.
Looking to the future
Overall, British SMEs are feeling very optimistic about the future. Three quarters of British SMEs believe their international revenues will increase in the next five years. However, the FedEx Great British Export Report 2015 reveals that, even though confidence is high, 58% of SMEs would like more help when doing business globally. Logistics providers, such as FedEx Express, have an important role to play, not just in getting goods from one place to another, but in offering expert advice and strategic guidance. Starting to export is a big step, but SMEs certainly don’t have to do it on their own.
If any UK SMEs want to find out more about how FedEx can help them to go global, they can visit the FedEx online Small Business Centre at www.fedex.com/gb/small-business.
