Do Britain’s small firms share the ambition of the Chancellor for exports? George Osborne set Britain a target in the Budget: he wants to get 100,000 more British businesses exporting by 2020 and he’s putting his money where his mouth is – in particular, with a doubling of the funds that UK Trade and Investment (UKTI) can use to support overseas sales through loans to purchasers of UK goods (plus these loans will now be cheaper).
Do Britain’s small firms share the ambition of the Chancellor for exports? George Osborne s et Britain a target in the Budget: he wants to get 100,000 more British businesses exporting by 2020 and he’s putting his money where his mouth is – in particular, with a doubling of the funds that UK Trade and Investment (UKTI) can use to support overseas sales through loans to purchasers of UK goods (plus these loans will now be cheaper).
It’s a policy decision that has been broadly welcomed by business groups, including those that represent smaller companies, and the money will have an impact. But here’s a worrying question: what if it isn’t a lack of financial support that has been holding companies back from exploring that have failed to explore export opportunities, but a lack of nerve?
Even before the Budget announcement of additional support, British firms were being offered as much government assistance from Government with exports as many of their international rivals. Yet they haven’t taken advantage – just 20 per cent of small and medium-sized enterprises in the UK export their goods and services, against an average of 25 per cent elsewhere in the European Union.
The figures ought to be the other way round because British companies have a natural advantage. For all the disappointment at home about decline in the manufacturing sector over the past two decades, British-made goods attract premium ratings with overseas buyers in many markets. And our service economy is internationally competitive.
It’s not easy to explain that gap other than in terms of insularity, that highlight British businesses’ tendency towards insularity and parochialism. Though English remains an international business language, The poor foreign language skills of Britons are undoubtedly preventing some firms from cashing in on opportunities in certain markets, and then there is the problem of conservatism and over-caution. Businesses worry about getting paid, don’t know how to research new markets, fret about how to transport their goods and services and complain about the paperwork – some even cite the Bribery Act as a reason for steering clear of export markets. In many cases, however, these anxieties aren’t based on experience; they simply reflect fear of the unknown.
The result is that the default option for many small businesses is not to export. They think they’re protecting themselves by putting up the shutters. However, In fact, UKTI’s research says a small business that exports is 11 per cent more likely to survive than one that doesn’t. Exporting SMEs are 34 per cent more productive than non-exporters, the agency claims.
With e-commerce, Ironically, exporting has never been easier for many businesses. They can The advent of e-commerce means it is often very easy to sell to international customers without having any presence at all outside the UK – or even a distribution network other than postal services. Small businesses that fine-tune international versions of their websites in order to appeal to foreign markets have a simple, low-cost way to test the potential of their products for export.
The export credit unveiled last week is not to be sniffed at and but many businesses need something much more basic. UKTI’s Passport to Export scheme, which works with businesses thinking about selling overseas for the first time, is an invaluable service. Ultimately, however, it’s up to small businesses to realise that need to do this for themselves. They must recognise that in a global market where foreign companies have no fears about selling to British customers, passing up export opportunities is even more risky than taking the plunge.
Oxford funds tax blow after Scancell leap
Shocking news for investors in two venture capital trusts, Oxford Technology 1 and Oxford Technology 3: both funds have been stripped of their highly advantageous tax status after falling foul of the VCT rules by holding too large a proportion of their portfolios in a single company.
The two funds are long-term investors in Scancell, now listed on the Alternative Investment Market, and topped up their holdings when the healthcare business held a rights issue last August – in both cases, the investment accounted for less than 10 per cent of their portfolios even after the rights issue. Within months, however, a sharp rise in Scancell’s share price took the value for both funds above 15 per cent, the maximum that a VCT may hold in a single company.
The funds reported the breach to Her Majesty’s Revenue & Customs themselves and last week it withdrew their VCT status.
Its hardline view is based on the fact the funds had added to their holdings in Scancell. Both are now appealing the ruling, but investors, who have benefited from upfront tax relief on their holdings in the fund as well as tax-free income and gains, could now face substantial tax bills.
Techie firms’ chance to win backing
Do you have a technology company in need of investment? If so, Tech Entrepreneurs Week might be the event for you.
The annual technology conference in London, which makes its third appearance in May, has launched a competition for technology entrepreneurs, with a first prize of £50,000 of capital investment for the winning business.
To nab the cash, you’ll need to beat the competition in a series of pitches to business angels and venture capitalists. The contest is free to enter, but places are limited to 100 companies – see www.techentrepreneursweek.com for more details.
Martin Warner, the organiser of the event, says London needs more platforms to support and encourage technology entrepreneurs as competition for such businesses from rival cities bothdomestically and internationally continues to mount.
“For London’s technology community to grow, we need world-class insight from the best experts in the field and for those who already have the insight, we need faster and more visible access to capital,” Mr Warner argues.
Small business person of the week: Chris Havemann, CEO, RatedPeople.com
“The business launched in 2005. It was founded by Andrew Skipworth, who is now a non-executive on the board, after he had a problem with a builder who walked off a project halfway through. Andy found it hard to find a replacement he could trust and that was the inspiration.
“People want to be able to find tradesmen through word of mouth from friends or family, but that often just isn’t possible – research shows this only works in about half of all situations, and then you re stuck with the Wild West.
“RatedPeople.com is effectively an online equivalent of the word-of-mouth idea. It’s free to consumers, who post the work they need doing on the site – we then match the job to three potential tradesmen who might be suitable. Crucially, our tradesmen are all rated on quality, reliability and value for money by people who have already used them.
“We’ve come a long way since launch and have 25,000 tradesmen registered on the site. Last year 2.4 million jobs were posted. “We started out with angel finance but Frog Capital, the venture capitalist, made a major investment in the business in 2012, which enabled us to finance a national advertising campaign. We’ve also just secured £6.5m of investment in a pre-IPO funding round.”