The CBI is urging small and medium-sized businesses to venture into export markets. The group said earlier this month its latest survey showed that confidence about export prospects for the year ahead has risen among UK SMEs for the first time since October 1996.
Over the next four months companies expect total orders to increase at the fastest rate since April 1997, the CBI said. They also anticipate a small rise in export orders, which have been falling for more than four years.
But at a time when smaller businesses are looking to recession-proof their operations, many may be overlooking opportunities in export markets, according to experts this week.
Smaller companies still seem reticent when it comes to tackling export business despite the potential for accessing new, lucrative markets. According to the DTI the European single market offers a market for UK goods comprising 380 million consumers and making up 40% of world trade.
For many companies looking to expand, exporting represents a highly attractive option to trade the highly competitive UK environment. However, lack of knowledge of overseas markets plus perceived problems of trading abroad means that many SMEs only dabble with export or stick to the domestic market.
Chemence is one example of a company that tackled the question of export early on. This #30m turnover adhesive and sealant manufacturer exports 65% of its products to more than 65 countries worldwide.
According to marketing director Jonathan Mahoney, the biggest issue has been planning, particularly in relation to the euro.
‘We had a Barclays’ euro account from the first day it was available and transferred all our long-term borrowing into euros. We’ve also always been able to invoice in euros,’ he said.
While Chemence is a sales-driven organisation, keeping close tabs on currency variables has been key to its strategy.
‘Over the last two years 20% has been wiped out by currency fluctuations, but we try and balance that out with improvements in efficiency, purchasing and sales drives,’ said Mahoney. Over the same period, Chemence has upped its sales by 30%.
‘Most of the barriers are psychological,’ he added.
There is plenty of support available to exporters. According to the latest figures available from the government’s Export Credits Guarantee Department, during the 1999/2000 financial year the ECGD provided #4.7bn of new guarantees for UK capital goods exporters, a #1.4bn increase.
It also insured #797m of overseas investments made by UK companies.
For further export help and advice visit www.cbi.org.uk.
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