A recent survey by Aus-UK Chamber Chartered Chamber member, OFX, has revealed UK SMEs see Brexit as an opportunity, as international trade rises.
• 67% of UK SMEs feel confident about overseas trade
• 48% of SMEs have increased international sales since the EU referendum
• Most SMEs now see the USA, rather than Western Europe, as the most attractive market for exports (62% vs. 20%)
• 70% of millennial entrepreneurs believe their business will be better off after Brexit
4th August 2017 – London
Small UK businesses are confident about international trade, and have been taking advantage of the weak pound to grow their business internationally since the EU referendum, according to new data.
International payments company, OFX, an Australia-United Kingdon Chamber of Commerce Chartered member, commissioned the survey of small U.K. businesses. OFX revealed that, while growth begins to slow at home, innovative SMEs are moving their focus to global sales, to bolster their sales.
500 SME owners and senior managers were surveyed, of these, two-thirds said they feel confident about doing business overseas (67%). Since the EU referendum, nearly half have grown international sales (48%), while 36% expect either start or grow exports in the next twelve months.
Inflation hits domestic market
As the landscape in the domestic market grows ever more volatile, SMEs have seen an increase in overseas sales. Since the EU referendum, 28% of the SMEs surveyed cited sales have decreased to UK customers, while 44% say rising inflation is the main current concern for their business. 49% have raised the price on some if not all of their goods or services in the last year – and the weak pound is the single biggest reason for doing so (62%), having made raw materials more expensive. Indeed, 44% of SMEs have stopped or reduced imports in the last twelve months.
Hardy and reactive, SMEs explore global opportunities
Overseas, the weak pound is making British goods and services more attractive to international buyers – and UK SMEs have swiftly taken advantage of these circumstances. Of those that plan to grow their global sales in the next year, 46% are doing so because of declining UK sales, while 1 in 5 want to take advantage of the weak pound and attractive prices to international buyers (21%).
80% of SMEs surveyed said their business already exports goods or sells services outside the UK, and for over half of the country’s SMEs (55%), overseas sales now represents at least 10% of their total revenue.
According to Jake Trask, FX research director at OFX,: “Following the referendum, small businesses have shown their resilience by turning a weak pound into a real opportunity. While not all SMEs supported Brexit, their size, optimism, and entrepreneurialism have allowed them to adapt swiftly to a changing market. We expect to see more of this fighting spirit as Britain prepares its exit from the EU.”
UK SMEs heading stateside
For small businesses looking to start and grow exports in the next year, the USA is by far the most attractive market. Nearly have of all SMEs surveyed are currently doing business with the USA (48%), on par with those trading with Western Europe at 47%. Notably, only 20% of these SMEs plan on increasing their European exports in the next 12 months, compared with the 62% who plan to increase their exports to the USA.
Brexit to boost SME international expansion
63% of SMEs think their business will be better off, or altogether unaffected once the UK departs the EU. SMEs who predominantly trade with the USA are even more likely to see leaving the EU as an opportunity, with almost three quarters believing their business will be better off after Brexit (72%).
Trask says: “Exporters trading with the US have seen the post-referendum weak pound as a boost for business. Sterling denominated goods have been on average 15% cheaper since the vote to leave the EU and the GBP/USD exchange rate collapse. However, with President Trump struggling to push through his promised reforms, the dollar has weakened, eroding some of the savings seen by US importers.”
Millennials embracing the opportunity of ‘Brexit’
Young people, overwhelmingly voted to Remain in last year’s referendum*, so, somewhat surprisingly, OFX report that SME decision-makers aged between 18 and 30 are most likely to embrace Brexit. 70% believe their business will be better off after Brexit (vs. only 22% of those aged 31-40 and 15% of those aged 41-50), while 80% believe “no deal is better than a bad deal” when it comes to the terms of the UK’s departure from the EU.
SMEs run by millennials are also the most global – a mere 7% of small businesses in this age bracket don’t currently do business overseas, and 67% earn between 15-30% of their revenue from global business.
Unsurprisingly, 90% of SME decision-makers in this age group feel confident about doing business overseas.
* YouGov exit poll, 27th June 2016: https://yougov.co.uk/news/2016/06/27/how-britain-voted/
An OFX Insight
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Notes to editors
Based on a survey of 500 owners and senior managers, at UK businesses with between 10 and 249 employees.
Summary of findings from UK SMEs:
• Two-thirds (67%) feel confident about doing business overseas
• Since the EU referendum, 48% have increased sales to overseas customers
• 36% expect to start or increase exports in the next year
o Of these, 46% are doing so because of declining UK sales; 1 in 5 want to make the most of the weak pound (21%)
o The USA is the most attractive market for doing so (62%); only 20% plan to increase exports to Western Europe
• 4 out of 5 now export goods or sell services outside the UK (80%)
• For 55%, international trade now represents at least 10% of revenue
• Currently, 48% trade with the USA; 47% trade with Western Europe
• The majority (63%) believe their business will be better off after Brexit, or left unaffected
o 72% of those that trade with the USA believe their business will be better off after Brexit
• Since the EU referendum, 28% have seen sales decrease to UK customers
• 44% say rising inflation is the biggest concern for their business
• 49% have raised the price of goods or services in the last year
o The weak pound, which has made raw materials more expensive, is the biggest reason for doing so (62%)
• 44% have stopped or reduced imports in the last year
Of SME decision-makers aged 18-30:
• 70% believe their business will be better off after Brexit (vs. 22% of those aged 31-40, 15% of those aged 41-50, 15% of those aged 51-60 and 9% of those over 61)
• 80% believe “no deal is better than a bad deal” when it comes to Brexit (vs. 36% of those aged 31-40, 32% of those aged 41-50, 40% of those aged 51-60, and 47% of those over 61)
• 67% earn between 16-30% of their revenue from global business (vs. 25% of those aged 31-40, 15% of those aged 41-50, 9% of those aged 51-60 and 11% of those over 61)
• Only 7% do not currently do business internationally
• 90% feel confident about doing business overseas
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