Much has been speculated about whether small and owner-managed businesses will be hard hit if the UK leaves the EU. We recently spoke to over 1000 small businesses around the South East and London about this issue and the findings were intriguing.
Almost 60% of SMEs told us they export to both the EU and the Rest of the World already but only 3% export just to the EU. The impact of this is hugely significant, as while the EU is touted as an "easy market" to target, the Rest of the World certainly isn't. So why do only 3% see value in exporting just to the EU? There could be a variety of reasons for this but it may simply be a case of the increasing regulatory burden and general economic climate in the EU not being deemed to be as attractive as it once may have been. Combine this with proactive countries across the globe actively courting new investment and offering great incentives covering a variety of areas ranging from funding to tax credits in certainly industries and its evident that the EU has serious competition on its hands.
Clearly UK's SMEs are not putting all their eggs into one basket, but rather building their expertise and developing the best growth strategy for success. To export successfully and profitably, business owners must have already had to negotiate with different government bodies on tax and business regulations, in diverse languages and have learnt to operate across a variety of time zones. These findings tell us that UK SMEs are smarter and more adept at globalisation than we possibly give them credit for.
Two thirds of all SMEs surveyed demonstrated improved business performance with increased turnover, profitability and staff numbers when compared to three years ago. While there are a number of reasons for this improved performance such as an improved economic environment, better access to funding and other supportive SME-specific government initiatives, it appears that UK's SMEs have grabbed on to the growth potential behind exporting to the EU and the Rest of the World.
The research shows that certainly sectors fair better than others when it comes to exporting success with agriculture, mining and utilities as well as manufacturing leading the way. The demand for these products and services is high and for the SMEs we questioned, exporting to both the Rest of the World is equally, if not more important the exporting to the EU. It seems the writing for the EU is on the wall.
So will exiting the EU leave our SMEs, who let's be honest are the core of the UK economy, with a deep gash or a simple scratch? Only time will tell!