Lack of overseas trade costing three-quarters of SMEs
Three quarters of SMEs are not capitalising on long-term opportunities and are missing out on international trade, according to new research.
This comes despite the belief that exporting among these smaller companies will play a massive factor in the economic recovery.
Currency exchange firm Caxton FX discovered that nearly half of businesses are focusing on short-term goals rather than looking towards long-term growth.
At the same time, the survey suggests a lack of confidence among SMEs when it comes to overseas expansion. This fact plays a major role in why 75% of SMEs aren’t broadening their business horizons in this direction.
This focus on the short-term can place massive financial strain on a company should anything go wrong although corporate restructuring could help improve the running of the business.
Furthermore, 88% of businesses admitted to never trading overseas while around half of those that had previously traded overseas said they would do so again in the future.
Those SMEs that do operate in the overseas market do so mainly in Europe while 50% trade with the US.
Maybe the most concerning factor is that only 20% of companies were found to trade with BRIC countries (Brazil, Russia, India and China) despite the massive opportunities that are available there.
The lack of overseas trading among SMEs was attributed to a number of factors, including a lack of knowledge about it and an inability to identify the right markets to enter.
Government legislation was an issue in 25% of cases while inadequate resources were also holding back trade.
A lack of funding was also blamed as many companies are not prepared to risk administration and insolvency by opening new trade routes in other parts of the world.
SMEs in the survey said greater assistance is required if they were to consider entering foreign markets while there appears to be significant barriers blocking their path.
The government is said to be doing a great deal to help encourage companies to begin exporting, but on this evidence it appears more needs to be done.