26 June 2012

Report says middle sized businesses need to focus more on exports

Over the last few years, UK companies have been urged to sell their products and services around the world, rather than relying on the local market.

Some have risen to the challenge – and winners of various categories in the British Engineering Excellence Awards are testament to this. However, many companies haven't.

A recent survey of medium sized UK companies – MSBs – shows they are falling behind their European rivals when it comes to exporting. The report, by finance company GE Capital, found that only 17% of revenues from the UK's mid sized business sector comes from customers outside of the UK. And 36% of companies in the sector rely entirely on the UK for revenue.

The Department for Business, Innovation and Skills (BIS) says there are 10,000 MSBs in the UK – just 0.2% of all UK companies. However, these contribute 20% to private sector turnover.

The report includes some interesting findings. For example, the UK has the second highest proportion of flat and declining MSBs in Europe – with a quarter of those surveyed simply focused on staying in business. But it also has the second highest proportion of 'gazelles' – companies that have increased their revenues by at least 20% annually for four years or more, starting from a revenue base of at least $1million.

BIS believes many MSBs have growth potential and that they could add another £50billion to the UK economy by 2020. To achieve this, attention is being focused on gazelles and on struggling companies, helping them to grow their businesses; not just in the UK and Europe, but also in developing markets, such as China.

The move is getting support from the CBI, which believes MSB success is linked intrinsically to exports. But it calls on MSBs to be more ambitious and confident and to build their skills and competencies. In exchange, it says MSBs need easier access to capital. Whether you agree with the CBI or not, it is right when it says things can't carry on as they are.

Graham Pitcher

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