Small and Medium Enterprises: Stay at Home or Play Away
We look at the pros and cons of exporting to help small businesses with their decisions to trade overseas or not...
As a small business owner you need to be constantly thinking how your business can grow and develop. Standing still and letting things stagnate is one of the worst things you can do.
But with these uncertain economic times it can often feel as if it’s the only thing you can do. Cutting costs and trimming the excess is always a valuable exercise, but it’s important to think about what the next steps for your business are, with one of the biggest questions is whether you should expand into trading overseas.
The Current Position
A recent survey into around 4,000 small and medium-sized enterprises (SMEs) found that despite growth in the second quarter of 2012 for many sectors including manufacturing, construction and transport; many of these businesses did not have the desire to trade outside the UK. In fact, only 11% of the business involved stated it as a business objective.
Factors Holding Them Back
There may be many reasons why businesses would not want to trade outside the UK, with the main issue likely to be the uncertainty of foreign markets. Following the issues seen in Greece, Spain and Italy over the last 6 months and the following Eurozone crisis, it may appear more sensible to continue growing in the UK. Imagine spending capital to operate abroad, issuing invoices; but then running into difficulties receiving payment. In an uncertain economic climate outside the UK; it’s feasible you may be dealing with clients with financial problems and poor credit. This could easily spell financial problems for your business.
There is a solution, however, in the form of export factoring for overseas trading. Export factoring is a service provided by UK asset based finance companies assisting SMEs when dealing abroad. Within 24 hours of your invoices being issued you’ll be provided with an agreed percentage of the final amount by the company. Once the invoice is paid in full by your client, you’ll receive the remainder, minus a small agreed admin fee. This ensures you have cash flow to help you expand into these areas. You’re not borrowing as it’s money you’re going to receive through the original agreement with your client.
Another major benefit rests with the fact you can pass your sales ledger onto multilingual experts who’ll chase the outstanding invoices on your behalf. They’ll also run credit checks on potential clients before you do any business abroad – providing you with another layer of protection.
Trading overseas may be daunting, but with a little extra help breaking into new markets could be extremely profitable and the perfect way for your business to grow and expand.