& psychological2 Profitable & practical
1. Perceptual & psychological
The UK has a stellar record when it comes to trade, being the world’s second largest exporter of commercial services (data from the World Trade Organiastion) and the eighth largest exporter of merchandise (from the OECD Factbook 2008). It has one of the highest shares of services as an exporter across the globe. But my question to you is this: when you think of the word ‘export’ or the concept of ‘going global’, what comes to mind?
I will hazard a guess it is:
big business and large investment
cargo and freight
manufacturing and machinery
capital and infrastructure.
International trade carries with it the perception of being a heavy-duty task taken on by big companies with deep pockets. This is even reflected in the way we measure exports and the imagery that goes with it.
The international trade page on the Business Link website (www.businesslink.gov.uk) shows a large ship carrying big boxes, ploughing its way through choppy seas. The key export indicator as measured by the Office for National Statistics is ‘The Monthly Review of External Trade Statistics’ which notes oil, manufacturing, chemicals, road vehicles and power-generating equipment as top exports from the UK. There is little reference to the volume of smaller items sold via the web and packages shipped via the local Post Office.
Despite the fact this perception no longer matches reality, small business owners are put off, with exporting made to look an intensive and expensive affair.
“While exporting may have traditionally been seen as only suitable to companies in industries such as manufacturing, firms operating in other sectors have the opportunity to explore new markets and assess international demand for their products.”
– Donald Kerr, commercial banking director, Bank of Scotland
Many business owners speak of ‘fear of the unknown’ when it comes to doing business with people they don’t know in countries they’ve never visited and in languages of which they have little knowledge.
Certainly, international trade forces us out of our comfort zone. But what it does do is introduce us to new territories and ideally, lucrative ones!
Despite an insatiable consumer appetite in China and India, companies dipping their toes into international waters are opting to trade much closer to home.
– HSBC ‘Going International’ report
2. Profitable & practical
You want to know that time invested is time well spent. Small businesses have doubts over:
how to cost-effectively find and communicate with customers abroad
how to guarantee payment amidst currency fluctuations
what the general cost of exporting is, when taking into account shipping and international travel.
“Trepidation is founded on issues like geographical distance, language and cultural differences and occasionally market access barriers. It’s about having the confidence to visualise yourself doing business outside the UK.”
– Lord Davies, former trade minister
When it comes to matters of a practical nature, this category is an umbrella for a number of fears, including how to go about identifying overseas customers, tackling legislation and paperwork, language and cultural barriers, and where to go for help.
41% of small businesses not trading internationally view the language barrier as the key inhibitor in taking their businesses overseas.
– HSBC ‘Going International’ report
There’s even the practicality of air travel, with the 2010 volcanic ash cloud having had such an impact that 16% of companies said they would reconsider overseas trade on account of the disruption it can be subject to.
In December 2009, trading platform Alibaba.com questioned 3,600 entrepreneurs about sources of help and advice. The results revealed that 98% of respondents were unaware of initiatives to facilitate international trade.
Evidence given to the National Audit Office by CBI emphasised the same issue:
“A cry we often hear, particularly from small and medium-sized companies is that, ‘I just didn’t know that this was a service which was available to me’.”
And in our own ‘Going Global’ survey carried out on Enterprise Nation, 79% of respondents said they did not know that public support for international trade promotion was available.
This has been acknowledged by national government body UK Trade & Investment (UKTI), which, with an annual budget at its disposal of £268 million, is charged with attracting inward investment to the UK and boosting exports from the UK.
Indeed, the agency’s own research:
“indicates large numbers of existing exporters are not aware UKTI exists or are not convinced of the potential benefits from any external assistance, suggesting that many businesses have yet to access the services provided by UK Trade & Investment.”
Actions are being taken to raise its profile, but UKTI will want to be sure their programmes are well-suited to the needs of modern day global traders who tend not to have employees, export departments or years of trading history, all of which currently form the eligibility criteria of key programmes such as Passport to Export.
As a beginner’s guide, this book has been written to get you started on the right foot and with all the resources you need to prosper as you start to export to the world. If you have felt any of the fears raised above, don’t worry, as we will be busting the myths they depend on, and bringing down the barriers that may be holding you back from profitably taking your own business global.
I see fear stopping people making sales. To them I’d like to say don’t let fear of the unknown or prejudice hold back your business – widen your market, spread your wings!
– Mhairi Gordon, Impact Associates
Bring down the barriers!
It’s time to face the fear and fight back with reality; the reality of international trade according to the businesses profiled in this book and people who responded to our Go Global survey held in July 2010.
Fears and realities
Fear: To trade successfully overseas, I first have to trade in my own market for years.
Reality: 28% of the companies surveyed
