The economic outlook in the UK may have improved slightly in recent weeks, but elsewhere in the eurozone the horror stories continue.
However, despite the blustery outlook, research shows that small business owners should still be looking to Europe, and even further afield, for export opportunities if they want to maximise their growth.
In fact, exporting could be the secret to success in times of economic slowdown - businesses that do so grow by almost a third in the first two years, according to a study by Barclays.
Professor Puzzle: Ben Meldrum has watched his business boom since exporting WE DIDN'T REALISE HOW QUICKLY PROFESSOR PUZZLE WOULD SNOWBALLBen Meldrum is the owner of Professor Puzzle, a company based in Surrey that manufactures and distributes puzzles metal and wood. Ben learned the craft in India 15 years ago and has gone from selling on a market stall in Camden to owning a £1.5m turnover business.
The company, founded in 2002, manufactures most of its products in China, which are shipped to the UK and then re-distributed around the world.
Meldrum started exporting in 2004 and from the very start knew it would help his business to grow.
He explains: 'We supply to all the majors in the UK, from Sainsbury’s to John Lewis, but there’s only so much growing we could do domestically.
'We export mainly to Europe and America but we didn’t realise the opportunity that was there.
'We sell puzzles that are instantly recognisable, so there’s no need for translation and we sell in Dollars which means we’re not exposed to exchange rate fluctuations.'
He was shocked with how well a business could do purely from reputation: 'We didn’t realise how easily it could snowball, how if it does well in one place in can be an instant hit all over the region; reputation can go a long way. When we started exporting it accounted for approximately 5 per cent of our turnover, it’s now 35 per cent.'
Meldrum is certain that exporting is the way forward for the business: 'Our turnover is increasing very fast and if want to continue we have to be more dependent on our international business.
'If there’s one piece of advice I would give to future exporters, it’s looking for the right partners in the countries you’re looking to export to. Don’t assume the big companies are the best, sometimes a smaller business will treat your company with much more attention and care.'
Carried out among 1,500 small businesses in the UK, the Barclays study also shows that benefits are often seen quickly, with 29 per cent experiencing a positive impact on their bottom line within just six months of expanding into international markets.
Eight in ten (82 per cent) experienced a positive impact on their bottom line after two years of exporting.
But, despite these encouraging figures, most small businesses are yet to consider exporting themselves.
EXPORTING: THE FACTS48 per cent of small businesses who export saw an increase in their sales over the last two years, compared to just 30 per cent of businesses who have remained solely within the UK market. 53 per cent of those who are currently exporting see the revenue they generate through selling to customers overseas increasing during the next five years84 per cent believe that exporting is important to their future business growthOnly 23 per cent of small businesses who don’t currently export say they are planning to start in the next five years. A further fifth (21 per cent) are currently undecided as to whether to start exportingAn average of 336,000 more people are being employed across the UK as a result of businesses exporting or selling to overseas customersBusinesses who have been exporting for more than three years plan on expanding to countries including Hong Kong, India, China and Australia
'There are not enough small businesses exporting and it’s important to understand why,' Simon Nicholson, Barclays head of international trade for business banking, explained.
The Barclays research, resulting in its Business Abroad service, which provides access to expert guidance, workshops and tools for business ventures abroad, highlighted a number of reasons as to why this might be the case.
For example, smaller firms tend not to export because many believe they are too small to break into the international market.
But Nicholson pointed out: 'Contrary to common belief, small businesses don’t have to be a certain size to export - in fact more small firms are going straight into exporting from day one than ever before.
'For example, I have a client that's only recently launched, has an annual turnover of £200,000, and is already exporting – so long as you have the right help and support there’s no reason why you cant tap into those markets.'
But he does believe start-ups and smaller businesses should build up their exporting experience gradually.
'Usually businesses start with Ireland, Germany and France. They are a good place for them to cut their teeth, learn the right lessons and get used to exporting. Most places in Europe are a good starting point but these countries tend to be the most popular.
'Despite the problems in Europe, I would still recommend going there first – there are still opportunities for small businesses to learn and export and I would be very concerned if a small business just went straight in and started exporting to emerging markets.'
Further down the line, countries such as Hong Kong, China, India and Australia provide good opportunities for growth, he adds.
Germany: A good stepping-stone for businesses looking to exportBut for those that do decide to take the plunge, the challenges are vast.
Finding new contacts for potential customers was flagged by 30 per cent of those polled as a major challenge, understanding different legal and tax structures by 27 per cent, language and culture differences by 20 per cent and customs procedures, 21 per cent. This means it is vital that business owners do their homework.
Nicholson explains: 'The problem is that for a lot of people, their first port of call is to talk to friends and family, and then Google. There is a lot of information out there, but it’s not always the right information. It is worth paying for advice if you are thinking about exporting.'
He adds: 'If you don’t go through something like a bank, you should still make sure you get the right advice. Go to UK Trade and Investment (UKTI) which can give helpful insight.'
