Mid-sized businesses in the UK are being too conservative in their export ambitions, according to new research.
A study by Lloyds Bank found that businesses turning over between £25m and £750m are not considering key growth markets overseas, even though they are aware of the benefits of exporting. Almost three out of five (58%) do not currently export and less than one in 10 (7%) are looking to do so within the next five years.
According to the findings, just under a fifth (17%) of businesses stated that selling overseas is one of their top three business objectives for the next 12 months.
This contrasts with two out of five businesses (43%) that said that focusing on growing their UK market is their top priority and three out of five mid-sized businesses (60%) that are focused on increasing turnover.
A third of businesses said they are focusing on reducing their costs (38%) and a similar number on increasing their productivity (34%). This reflects the fact that firms are focusing on their own performance before looking at exporting opportunities. The figures were similar when respondents were asked for their objectives for the next 10 years or the next 12 months.
This lack of focus on exports is despite businesses being aware of the benefits. Around three-quarters (73%) said that the main advantages of overseas trade were expanding their customer base, while just over three-quarters (77%) linked it to increasing sales and profit.
Businesses listed a number of factors that they said prevented them from exporting to new markets. These included: not having the right contacts (21%); products not being suitable for overseas markets (20%); not understanding the legal and regulatory requirements (20%); not having the time and resources to investigate (20%); and volatility in exchange rates (17%).
But firms were confident of attaining trade finance, with only a fraction (5%) citing access to finance as a barrier to exporting.
Tim Hinton, MD for SME and mid-markets banking at Lloyds Bank, said: “Although business confidence has reached a record high, mid-sized firms often appear to be overlooking the benefits of exporting.”
Sally Percy is editor of The Treasurer