UK SME’s fear complications of international business

The majority of UK small businesses (60 per cent) are not exporting abroad, potentially missing out on millions of pounds in lost revenue.

This is according to new research from Royal Mail, released as part of Small Business Advice Week this week.

For 26 per cent of small businesses, the cost and complexity of getting through customs is the main obstacle to exporting. However according to Royal Mail’s International Delivery Matters reports, many international orders from outside the EU fall below the minimum price threshold at which customs duties are chargeable.

Other reasons given by small business owners for avoiding exporting were a lack of knowledge of the market (21 per cent) and language barriers (21 per cent).

But the research shows that those who are not selling overseas are missing out. Among the 40 per cent of business who sell internationally, just over a quarter of their sales this coming Christmas (26 per cent) are expected to come from international orders.

The study of 300 senior decision makers and small business owners was conducted by Royal Mail to assess small business owners’ attitudes to international growth. It also found that 35 per cent of small businesses believe Europe holds the most potential to generate new sales for their business. Looking further afield, 28 per cent believe the USA and North America hold the most potential.

A further look into the export aspirations of UK small business owners found that 10 per cent are currently selling to customers within the EU and would like to seek more opportunities to sell to non-EU customers. Fifteen per cent said they sell outside the EU and would like to seek even more opportunities to sell to non-EU customers.

While domestic online marketplaces are popular among small business looking to grow their UK customer base, only 25 per cent of small businesses look to international marketplaces to grow their sales potentially missing out of the huge sales potential they offer.

Jim Shaikh CEO of Yoomi, manufacturer of self-warming baby bottles said, “Expanding internationally was a no-brainer for us. The UK market for our product is very mature and we found that expanding abroad was the logical next step and the only clear way for us to achieve solid growth.”

Roger Morris, Head of Royal Mail Parcels adds: “Getting started as an exporter can be daunting. We have taken significant steps to help businesses looking to start exporting, from in-depth research into international markets, to enhancements to our international products. We believe that international is just another postcode. We work with businesses to establish reliable value for money services.”

To support UK businesses looking to expand internationally, Royal Mail’s Tracked and Signature services are now available to 14 new countries, including Barbados, Belize, Cook Islands, Georgia, Greenland, Lebanon, Russia, Tonga, Uganda, Aland Islands and Faroe Islands.

Royal Mail has also announced it is increasing the compensation it offers customers using its International Tracked products from £50 to £100. The increase will apply to items posted from the 10th October 2016.

Royal Mail’s top tips for businesses wanting to sell internationally
• Research the market – be committed as a lot of businesses end up being incidental exporters
• Consider online marketplaces –Royal Mail’s storefront on Tmall global is a great way to start selling to Chinese consumers
• Research the delivery preferences of online shoppers in the market you plan to sell in – Royal Mail’s International Delivery Matters reports
are a good source of information.
• Consider using international tracking and signature services when shipping your products: this gives customers confidence to shop with you
• Give it a go: it’s easier than you think and the rewards can be huge.