Last June’s European Union referendum vote caused the value of Sterling to plummet and many businesses across the country have felt the effects.
With Theresa May set to trigger Article 50 today, there is the potential for sterling to fall even further.
But what does this mean for the UK’s small businesses, particularly those currently, or planning to, export internationally?
New source of wealth
One significant positive is that a weak sterling will encourage foreign investment into the UK, thereby providing businesses looking to grow with a potential new source of wealth.
Moreover, a weak sterling will reduce the value of British goods and services, making them more attractive to foreign buyers. This presents UK businesses with a huge opportunity to export and trade more overseas, particularly smaller business for whom exporting may historically have seemed too costly and out of reach – with a 25 per cent drop against some major currencies since June’s referendum, previously unsuitable markets are rapidly opening up for those willing to react.
Made in Britain
British businesses no longer need to rely on the weakness of the pound to export. The ‘Made in Britain’ brand carries huge weight with many overseas buyers. For example, HM Revenue and Customs reports a 25 per cent rise in the export of British-made clothing since 2011, highlighting the allure of British branded goods to foreign buyers.
We have seen the allure of British branded goods first hand through our work with North West-based drinks business Wake Drinks, who brand their drinks cans with the Union Jack.
The idea was conceived after founder Alex Buckler visited South East Asia and acknowledged the affection the region had for the British flag. Three years on, the brand has had enormous success selling in China through their website and regional e-commerce platforms.
So there’s a clear opportunity for UK businesses: a weaker pound coupled with the strength of the ‘Made in Britain’ brand means exporting should be top of everyone’s to do list in 2017.
Benefits for small businesses
But what are the benefits of exporting, particularly for smaller businesses who might be tight on resource and capital to invest in new trading links?
Recent research we conducted with the CEBR shows that nearly half (43per cent) of SMEs who export enjoy an increase in profits of up to 20 per cent and a further one in ten (nine per cent) enjoy a strong increase in profits of over 20 per cent as a result of exporting. The financial benefits of exporting are therefore plain to see.
So whilst we’ve seen unprecedented levels of volatility and political uncertainty over the last twelve months, opportunities for UK businesses have manifested. As some parts of the world are looking increasingly inwards, businesses that continue to look outwards that will stand to benefit most.
For UK small businesses in particular, a weaker pound shouldn’t be taken as a sign to batten down the hatches, but a green light to explore new markets and export more goods and services.