Business Finance: Exporting is key to growth, says Steve Muncey
AS the UK emerges slowly from a double dip recession, the economy remains fragile. In order for businesses to grow they should be looking at the opportunities presented by exporting, and in particular to the high growth markets.
At our recent local technical update events, we asked businesses what would be the number one measure that they would like to see in place to encourage growth in the UK economy, and more initiatives to get UK companies connected and working with the emerging economies was the top answer for over a third (36%) of guests.
In June this year the UK’s trade gap widened to its worst level since comparable records began in 1997. However, the focus on exports continues to drive the Government’s growth agenda as the Prime Minister backs his national challenges to: double exports to �1trillion in 2020, increase the number of firms exporting by 100,000 by 2020 and raise the number of SMEs exporting from the current level of one in five, to the European average of one in four, by 2020.
Exploring the opportunities available through exporting to high growth markets will be key for any business looking to grow in countries where economic growth remains flat. The proportion of UK firms doing business overseas has risen over the past few years and whilst there is an increased awareness and interest in high growth markets, relative to our competitors, UK businesses don’t export enough.
Furthermore the UK’s biggest export markets, Europe and the US, have themselves become sluggish and UK companies could find themselves in a vicious circle of stagnancy if they don’t break free from this reliance and exploit the boom in developing markets.
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Exporting gives companies access to and profile in new markets, new revenue streams and spreads the risks to that business. It is also likely that as a result of exporting, a business can become more nimble, with a more responsive and innovative culture.
However, whilst the opportunities can be plentiful they can also be challenging. You need to make sure that you have researched the market thoroughly, chosen your business model carefully and understand the tax and legal environment and overseas payment mechanisms. Also you need to understand your competitors who are already operating in-country – can you compete on price or quality with what they are already putting into the market?
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Finally, for any business looking to export, build in an export plan, which is connected to your core business strategy. Playing at exporting will bring (at best) limited gains.
: : Steve Muncey is senior partner for KPMG in East Anglia.