The Forum welcomed Boosting Finance Options for Business, the report of the Breedon Review into alternatives to bank finance, published Friday 16 March, which called for an industry-led Taskforce to be launched by July with the aim of making specific proposals on how to remove barriers on bank lending to support SME trade finance.
However, ACCA’s SME Forum noted that hopes of an export-led recovery have already taken a dent, with data from the latest edition of the SME Finance Monitor from BDRC - the definitive record of UK SMEs' access to finance - showing the number of exporting SMEs declining steadily over the past year.
'The Coalition has set a lot of store by growing Britain out of the economic doldrums on the back of increased exports,' says Professor Francis Chittenden, Chair of the ACCA SME Forum. 'But as the latest figures show, the number of UK SMEs exporting isn't growing, it's shrinking. Global economic uncertainty is hitting UK SMEs hard and they need all the support they can get to compete overseas.
'The Government needs to increase awareness of its existing schemes and offering amongst small businesses, while the financial industry needs to develop a more tailored product and service offering aimed at exporting SMEs.'
The SME Forum is a group of UK entrepreneurs, accountants in practice and in business, venture capitalists, finance providers, academic researchers, as well as representatives from all major UK business associations. ACCA provides administrative support to the Forum, which is in all other respects independent of the global professional body.
In order to better understand the official response to the challenge of getting SMEs exporting, the Forum invited representatives from UK Trade & Investment (UKTI) - the government department charged with helping UK firms make the most of overseas markets to discuss the barriers to SME exports and what can be done to remove them.
The SME Finance Monitor data, drawing on a sample of 5,000 SMEs per quarter, show:
- In Q1-2 2011, 10% of SMEs said they exported goods or services. In Q4 2011, the figure was 5% (Q3 = 7%).
- Fewer SMEs than before are intending to export their goods or services. In Q1-2 2011, 11% of SMEs said they intended to achieve growth over the next 12 months by exploiting new markets abroad. In Q3, this figure was 7% and in Q4, the figure was 5%.
- Awareness of support mechanisms e.g. Enterprise Finance Guarantee, amongst SMEs was at 8% in Q3 2011 but fell to 6% in Q4.
- ACCA's SME Forum, which has been involved in the design and dissemination of the monitor from its inception, recommends improving the advice given to SMEs by government and making sure that advice is visible to its target audiences.
- UK Trade & Investment (UKTI - the government department charged with helping UK firms make the most of overseas markets) is a great resource for UK firms. It has products that are tried, tested, and proven successful, but they could usefully be expanded to enable more SMEs to benefit.
- Accountants - more often than not the principal business advisers for SMEs - need to be more involved in this process.
- Innovative firms face more problems than others when expanding overseas, particularly over issues such as intellectual property (IP) protection. Advice on IP needs to be improved.
- SMEs need support on sustaining exporter status. Evidence shows that barriers to export fall off substantially after some years of trading abroad, so supporting SMEs through the exporting learning curve is important.
'The Government is right that exports will be crucial to Britain's economic growth, but their attempts to support small businesses still haven't cut through with their target audiences,' concludes Andrew Leck, Head of ACCA UK. 'Problems such as the Eurozone crisis will naturally depress UK exports, but this doesn't let the Government off the hook. Now more than ever, it needs to make sure the available advice and support reaches those that need it.'
Nick Baird, Chief Executive of UKTI, said: 'At a national level, there was strong growth in the UK's goods exports last year, which were up 11%, so the opportunities are there. But it's quite clear that we need to get more SMEs exporting. Only one in five UK firms export as opposed to one in four in Europe. What we need is a change in mindset. We want more UK firms to make exports a routine part of their business planning, and we are working with organisations like ACCA to get the message across. SMEs make up 90% of the 25,000 firms that UKTI helps every year, and we are currently reorganising so that we can double that number to 50,000 by 2015. This year, with the Olympic and Paralympic Games providing an international stage, is a great opportunity for UK firms to take those first steps abroad.'
- Read the Boosting Finance Options for Business report in the 'Related Links' section to the left of this article.