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Exporting has been the latest trend in business and economic growth for some time now. Strongly supported by the Government and on the receiving end of endless media coverage, exports should, in theory, be on a meteoric rise.
Trade figures published by HMRC, however, suggest differently.1 Overseas trade data for January 2014, released in March of the same year, indicates that the value of exports to EU countries – Britain’s largest market for exports – rose by 2.3% £12.3 billion. This proved a smaller increase than the value of imports, which rose by 6.3% to £17.9 billion. Meanwhile, exports to non-EU nations decreased slightly, by 2.2% to £14.5 billion compared to the month before, in contrast to a rise in the value of imports.
It is clear that the UK has the resources and drive to succeed as an exporting nation; the label ‘Made in Britain’ carries a lot of clout overseas nowadays. Why, then, is it still not fully capitalising on the value that can be gained from exporting?
What is Proactive Exporting?
The difference between a business that is actively exporting and a business that is exporting to its full potential is proactivity. It is a common misconception that action equals proactivity. Just because a business is exporting to countries that it’s received demand from not does mean that it is taking advantage of all the countries and markets that it has the resources to tap into.
Proactive Exporting Can Bring Financial Success
The financial implications between an exporter who is reactive (i.e. who responds to markets) and one who is proactive (i.e. one who creates opportunities) can be staggering. The Eurozone accounts for about 50% of UK exports,2 but there exist export markets in many other countries which could offer phenomenal scope for trade. Manufacturers are starting to see increased demand from North America, mainland Europe, Asia, Brazil, Scandinavia and the Middle East, but this is not sufficient. By proactively seeking suitable new markets, UK exporters have the opportunity to increase revenue and grow.
Cost Minimisation Is Key
Cutting costs is important in every business, but it is even more paramount when it comes to exporting. Expanding operations to sell products or services overseas is still essentially the same as growing a business within the UK. Although exporting requires extra work to navigate new business landscapes and customs, it is, in business terms, an act of expansion. Exporters should therefore take care to minimise their operational costs, whether in terms of purchasing assets, hiring staff, shipping, currency exchange or more. Proactive exporting also means taking charge of minimising these costs in order to save money and increase profit margins.
Access to Support
Proactive exporters also requires support. They may know that exporting can expand both their business and bottom line, but might not be clear on how to proactively effect this.
The previous issue of Outlook focused on how businesses can access the support offered by government body, United Kingdom Investment and Trade (UKTI). In addition, Chancellor George Osborne’s Budget release in March also promised increased funding for export lending to £3 billion for businesses that require export finance, as well a cut in interest rates on those loans by about a third.
Proactive exporters need to seek advice, whether from UKTI, UK Export Finance (UKEF) or elsewhere in order to educate themselves about all the opportunities available to them. There also exist non-government specialists who will offer guidance covering the spectrum of issues surrounding exporting, from research to finance. It is by seeking education and information that exporters can fully recognise the scope of possibilities available to them, in order to export proactively and profitably.
1 Statistics | HMRC, April 2014
2 Export to expand in 2014 | UKTI blog, February 2014
