SMEs can be reluctant to explore markets beyond the UK borders but latest research from UK Trade and Investment (UKTI) shows that exporting has significant benefits for businesses, positively impacting on staffing, productivity, financial performance and longevity. Has your business joined the international market? Figures show that those firms who choose to export become 34 per cent more productive in their first year while those already exporting achieve 59 per cent faster productivity growth than non-exporters. Below are the highlights from their report on the benefits of exporting.
Earning through exports: Direct benefits
It’s obvious that venturing into new foreign markets can give a company access to millions more customers, reduce costs by increasing volumes, extend product life cycles and offers the chance to charge premiums on their products.
- 85 per cent of companies using UKTI services report that exporting has enabled them to achieve higher growth.
- Businesses that use the UKTI say that using the service has enabled them to achieve 49 per cent higher growth.
- Companies that export become 34 per cent more productive in the first year alone.
Earning through exports: Indirect benefits
By exposing entrepreneurs to new ideas and new competition, doing business abroad can also create a number of benefits to companies including the creation of new products or services and the creation of more efficient practices and processes. 59 per cent had either developed a new product or service or modified an existing one, rising to 70 per cent among users of UKTI services. Measuring to what extent these benefits lead to growth is difficult but it is clear that competing in these new environments often lead to intangible improvements such as new products, more productive use of capacity or higher brand awareness.
- 48 per cent of firms reported that selling overseas had increased their return on investment (ROI) from new products and services. Increasing to 61 per cent among companies that used UKTI services.
- 42 per cent invested more time and money in new product development as a result of selling overseas – increasing to 52 per cent among UKTI clients.
- 41 per cent said selling overseas had increased the money available for investment in new product development – increasing to 52 per cent among UKTI clients.
Earning through exports: Raising ambition
It’s difficult to know what specifically makes a company decide to grow through exporting. Research from UKTI shows there is a clear split between those companies that decide in a strategic and formal way to grow through export – for example, using quantified goals, accessing business support and creating perspective strategies. And those companies that decide in a more formal and reactive way – for example, relying on accidental and serendipitous factors. It seems that once a company has ‘dipped their toe’ into a new market, this tends to increase confidence and ambition and provides the momentum for further growth through exporting.
The study found that UK exporters were considerably more likely to have higher aspirations of ‘growing substantially’ than non-exporters. It found that firms with more ambitious growth objectives are more likely to actually experience growth through exporting with 56 per cent of the most ambitious firms reporting that growth would be achieved mainly through entering new export markets, as compared with only 40 per cent of those anticipating only moderate growth. Therefore it seems that export tends to spark increased ambition, and that raised ambition tends to create more growth through export.
All information from UKTI
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