UK SMEs' international exports increased by 34% in the second half of 2016, according to stats released by online payment company PayPal. The news shows that small businesses can still turn the uncertain economic situation to their advantage.
Falling pound, rising sales
While the falling value of the pound has contributed to rising raw material costs – particularly the imported food and drink that's so important to restaurant businesses – many companies have taken advantage of the shift to boost sales abroad.
A lot of UK manufacturers saw orders from the EU, US and China increase notably in the second half of 2016, with online sellers doing particularly well. A new survey by domain seller 123reg suggests that businesses with their own website (as opposed to a social media presence with buying limited to physical stores) are 51% more likely to grow than those without – something these new figures from PayPal back up. As PayPal UK managing director Mark Brant notes:
"The small businesses that were best placed to benefit from the influx of international shoppers were the ones who had already adapted their online stores – for example by letting customers browse in their own language, and pay in their own currency."
Adapting to economic changes
The Spring Budget is set to ring-fence a £27bn Brexit 'insurance fund' to help weather economic turbulence and earmark £1.5bn in business-rate relief to aid those affected by recent changes. However, companies shouldn't solely rely on state support in the shifting economic climate.
As well as taking advantage of a weak pound to increase exports, UK small businesses must also ensure their cash reserves and cash flow are strong enough to cope with future shifts.
29% of SME directors still rely on costly overdrafts to cover cash flow shortfalls, according to Bacs research, and if interest rates increase there could be a serious knock-on effect. With almost half of small companies having to deal from late payments, it's crucial to ensure that you're not just focusing on reaching customers around the world, but also on getting money owed for your services on time. That can mean taking the time to refine invoicing processes, charging interest on late payments and having enforcement plans in place for the worst-case scenario.
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