UK businesses are looking at overseas expansion post-COVID-19. Many believe that they are too reliant on a single market. To survive global issues such as COVID-19, they need to spread their risk and exposure across a broader customer base. The details come from a survey commissioned by global logistics, e-commerce and IT solutions provider, One World Express.
Atul Bhakta, CEO of One World Express, said: “At a time when the world has been turned upside down, it is unwise for business leaders to believe they can simply “keep calm and carry on”. So, it is positive to see many companies taking bold action in the midst of the pandemic.
“Exporting globally could be the difference between life and death for businesses in 2020. After all, countries around the world have been affected by the virus’ spread in different ways, so any business that sells to a broader range of markets is giving itself the best possible chance to succeed.
“Importantly, while many UK business believe expanding into international markets would be too complicated or costly, this is not the case. Selling products or services cross-border is both simple and affordable, as long as the prepares thoroughly and finds the right partners.”
What can we learn from the survey?
Enterprise Times was given access to some of the details of the survey, which was carried out by Opinium. It interviewed 924 people, all of whom it verified as being managers, C-level employees owners or founders of UK businesses. Importantly, it includes not just mid-large companies but small and micro businesses as well. The latter has been particularly hard hit over the last four years with VAT rules, Brexit and now COVID-19.
- Do you regularly export goods or services to international markets? Overall, 42% of respondents said yes, and the numbers show that small businesses (45%) are more likely to export than medium-sized companies (39%).
- Are you look for new opportunities outside the UK? The majority of respondents said yes (57%). Once again, the detail shows that small business (66%) are more interested than mid-sized companies (48%). The number of micro-businesses looking for an export market is 36%, almost double those that export today (19%).
There is an interesting stat across both these questions around the age of the business. Those that have been trading between seven and ten years were the most positive. Those that had been around the longest, the least likely to export and look to expand their exports.
What factors are driving this?
The key driver for change is cited as COVID-19 (45%). Businesses are already adapting to the lockdown by furloughing staff (48%), adapting their products and services (43%) and finding a different demographic (24%). But they also want to find a long term fix that will allow them to reduce the impact of another pandemic or global crisis.
It is not just COVID-19 that has created a driver for change. Ongoing uncertainty about trade deals around Brexit (44%) is also a reason for finding new markets. But finding those markets and being able to trade in them is not the same thing.
Taxes and regulations can be significant inhibitors to breaking into a new market. 51% are hoping that free trade deals post-Brexit will help expand their business. At the same time, 51%, admit that a lack of knowledge around international markets is holding them back. It highlights the need for greater business support from trusted advisors.
Enterprise Times: What does this mean?
Businesses need to adapt to survive long-term. That almost half of the companies surveyed are looking to expand their exports, will hearten the UK Government. Next year, when the UK will be relying on WTO rules for some deals, there will be extreme pressure on the national balance of payments. If businesses can increase exports, it will offset critical imports such as fuel, food and machinery. The UK is not yet self-sustainable in any of those areas.
The surprise in these figures is that mid-sized businesses are warier of expansion than small companies. There is also a need for micro-businesses to improve what they are doing to grow. Part of the issue here is likely to be funding exports including the costs of customisation, regulations and shipping.
There is also a sweet spot where companies are most likely to look for new markets. In the first six years, it seems that companies are keen to grow but prefer to survive. Between seven and ten years they are at the most expansionist. After that, it seems, from this survey at least, that they become much more conservative. Perhaps it is because they feel they have found their place in the market. It certainly raises an opportunity for more research.