Small firms have a strong appetite for international trade despite rising costs, new customs and product safety requirements and potential changes from the US election, according to new research by the Federation of Small Businesses (FSB).
FSB’s Ready to Dispatch report, published this week, calls on the Government to commit to trade export support policy that fits small businesses, as well as streamlining export support access, as small firms await the Trade Strategy and Small Business Command Paper, scheduled to be published in Spring 2025.
Nine in ten small firms believe exporting is important to the overall economy and growth in the UK over the next 12 months.
Most small exporters (61%) are considered as “passive” exporters, meaning they trade internationally by reacting to inquiries from overseas customers. In contrast, more than a third (35%) of small exporters actively pursue international opportunities.
Current small exporters ranked information on specific issues (eg. customs) (37%), visiting target market (35%), and financial support for specific activities (eg. tradeshows, translations) (31%) as the three most beneficial sources when entering or exploring entry to a new market.
Almost half of current and would-be exporters (49%) see knowledge of local regulations as key to increase their competitiveness on market entry, while four in ten (42%) view low delivery costs as key.
More than a third (36%) say they want support to answer specific queries, for example, how to issue an invoice to an overseas client or apply local VAT.
Despite a suite of readily available government support on export, not all of them are known by small firms.
Eight in ten current and former exporters say they are not aware of support provided by the Export Academy, a free online training programme for exporters, while a similar proportion say they don’t know about the government’s platform GREAT.gov.uk guidance or events (76%).
Seven in ten (72%) are unaware of Export Support Service, a helpline and online services where businesses can get answers to practical questions about exporting. More than a half respectively have not heard of services provided by overseas offices under the Department for Business and Trade (53%) and International Trade Advisors (58%).
FSB has put forward a package of recommendations to enhance existing government support for ambitious and aspiring small exporters, including:
The Secretary of State for Business and Trade should
- Ensure the voice of SMEs is strongly represented in the development of policy to give more, long-term strategic planning to SME exporting.
The Department for Business and Trade should
- Take a ‘think small first’ approach to export support and set new export targets that focus on SME growth, moving away from an overall value target, including growing the number of SME exporters to 20% by 2030.
- Publish clear timeline for business consultation when developing the trade strategy, including evidence sessions with SMEs.
- Integrate GREAT.gov.uk content under the Help to Grow umbrella to create a single business growth support hub.
- Convene a cross-departmental working group with HMRC and UKEF, plus external partners, to deliver greater cross-referencing and signposting between government resources.
- Expand the number of in-country attachés for high-growth sectors in priority markets and facilitate business contact with in-market resources.
- Require International Trade Advisors to hold a qualification from an accredited customs training provider or equivalent professional experience and explore restructuring the network to allow SMEs greater choice in working with sector- or market-specialists.
FSB Policy Chair Tina McKenzie said: “The UK’s aspiration to become an export-led economy can’t turn into a reality without small businesses, which account for the majority of UK exporters.
“While larger businesses have the resources and bandwidth to overcome trade barriers, small firms often don’t have a dedicated team that they can lean on to navigate international markets. That’s why government resources, such as signposting, guidance and helplines, are so important to them.
“There are a number of government export support programmes on offer. While it’s disheartening to see the level of SME knowledge and engagement with these resources isn’t as high as we would like it to be, this also highlights the tremendous opportunities these support services could bring to small exporters, if awareness building and delivery of support are done right.
“Against the backdrop of rising costs, new customs and product safety requirements and potential changes deriving from the US election, our members still show an undeniable zeal for international trade. The forthcoming Trade Strategy and Small Business Command Paper must keep this fire in small firms alight.
“Prior to this report, we’ve also flagged regulatory barriers facing UK small exporters through the FSB-led SME Export Task Force last summer, as tasked by the now Secretary of State for Business and Trade.
“The new Government is clearly intervening in the economy on domestic fiscal policy to empower and shelter small businesses, and our measures set out suggestions for how to apply this across trade policy.”