Domestic growth takes precedence for UK SMEs
Small businesses in the UK are focusing on domestic markets rather than foreign shores, a new study has revealed. But could this be limiting growth?
The study from Albion Ventures revealed that 37% of SMEs have entered new markets in the past 12 months compared to 53% in 2013.
Entering new markets is not without difficulty though and these issues could be causing SMEs to look closer to home for business.
A lack of expertise relating to a firm’s target market, strong competition, and a lack of finances were listed as the main reasons for encountering difficulties. However, businesses that did try to enter new markets revealed they were more confident about their growth potential than those who focused on home markets.
The 2014 Albion Growth Report also revealed that firms based in London and the North West are those most likely to enter new markets – 52% of these firms have already done so.
Businesses in these regions were also the most confident too; 82% of those in London and 81% of those in the North West predict growth in the next two years.
In contrast, only 23% of Scottish firms had attempted to enter new market. This suggests that firms in that region are unwilling to take risks but while such action can ensure that a business stays financially safe, it can also impede growth – which can be negative in the long term.
Having a well thought-out plan can mean that businesses are well placed to focus on growth; although decisions should always be made with finances in mind.
Small businesses can enter financial difficulty very quickly if they do not take the right approach, meaning they may require insolvency procedures in order to keep trading.
As the economy recovers, the position of many small businesses strengthens with it and so the likelihood of branching out into new geographical markets increases.
Currently, businesses appear unwilling to take risks which makes it difficult for them to take advantage of international opportunities – although such an approach does lend itself to strong domestic growth.
By Phil Smith