Boosting the adoption of trade tech, increasing support for targeting emerging markets and an initiative to help female-led SMEs start to export would make a significant difference to the number of UK SMEs exporting, according to a new report. 

‘Small business, big world: Ways to boost UK small business exports’ is one of the most extensive pieces of research ever conducted on the UK e-commerce market, involving in-depth round tables and surveys with 525 ecommerce businesses across the UK. It examines the main barriers small businesses face in developing a successful export strategy. 

The report was launched by the Chartered Institute of Export & International Trade (CIOE&IT), which chairs the E-Commerce Trade Commission, at a parliamentary reception to mark the awarding of its Royal Chartered status.

It identifies several obstacles, including customs bureaucracy and logistics, that are holding SMEs back from successfully selling overseas. Available finance and organisational motivation are also barriers to overseas trade for SMEs, relating to the size and productivity of the business. The interaction between customs rules and logistics on one hand and internal constraints on the other is creating a restrictive trading environment for SMEs.

Policy interventions tend to target external factors such as frictionless trade, but that will only go so far, according to the report. It recommends that these measures should be combined with schemes to get more SMEs ‘export ready’ by maximising growth and productivity.

The report, authored on behalf of the Commission by the Social Market Foundation (SMF), suggests six comprehensive recommendations for the government to boost SME exports. 

Is trade tech the solution?

Trade tech is identified in the report as particularly beneficial for small businesses that wish to access emerging markets. For example, digital payments (49%), e-commerce platforms (41%) and data analytics (40%) are identified as the most useful technologies. External obstacles such as regulatory compliance, customs procedures and tax issues are cited in the report as prohibiting factors impeding trade tech adoption and intensification of use among SMEs.

The report recommends that the government supports exporters by boosting the digital advice available through the Department for Business and Trade’s export support services. It suggests the introduction of grant funding for investment in trade tech to speed up adoption. 

Supporting female-led firms 

Trade tech could also be a key enabler for supporting female-led firms. The report argues for a national export mentoring scheme for female-led small businesses, established by the government and industry in partnership. This, the report says, would maximise reach among female-led firms. It would also help to address the challenge identified in a previous SMF paper of 70,000 small businesses who could be exporting through e-commerce, but currently aren’t.

The opportunity of emerging markets 

For firms already exporting to emerging markets, existing demand for the kind of products they sell (33%), and the presence of trade agreements (27%) are their primary reasons for exporting. 

In developing economies, consumption is growing at between 6% and 10% per year, in contrast to less than 1% growth in high income countries. Exporters who are considering emerging markets cited the possibilities of untapped demand in those economies for their goods (28%) and relatively low cost logistics (28%) as reasons for shifting focus to those regions.

The government should therefore ensure that its industrial and trade strategy includes a plan for seizing the opportunities presented by emerging markets, says the report. 

Marco Forgione, Director General of the CIOE&IT and Chair of the E-Commerce Trade Commission says: “The importance of empowering small businesses to reap the benefits of global trade is a must. It is key we use the power of trade tech to harness this potential and explore emerging markets.” 

“E-commerce can be a critical lever for boosting our export market, which in turn supports economic growth,” says Alison Ring OBE FCA, ICAEW’s Director, Public Sector and Taxation. “Chartered accountants are well positioned to support and advise businesses that want to start exporting their goods and services. This report sets out some clear and sensible measures that could ease the path for SMEs to trade more overseas.”