You may have seen that team Currensea launched a new multi-currency debit card for SMEs trading internationally at the start of October. As a small business, we empathise with many of the challenges SMEs face, especially this year. 2020 has been extremely stressful for all of us. Even those whose companies have emerged better off because they have a solution that was more needed than ever in the “new normal”.
So, we commissioned a survey of some of our fellow small business decision makers alongside the launch of our new offering. This research showcases to the country the challenges we’re all currently facing when it comes to international trade. As well as offering a tangible solution to some of those challenges.
Our data revealed that in 2019 80% of small businesses were conducting international trade. Whether that is buying, selling, or a mixture of both.That’s 4.72 million businesses across the UK. Nearly half of us (44%) focused predominantly on exporting goods (rather than importing). Which is backed up by statistics claiming that in one year alone international exports from SMEs can contribute £200billion in goods and services to the UK economy.
So, who are we normally trading with? Despite ONS reports claiming that exports to the UK have been declining since Brexit was announced (exports to the UK have supposedly declined from 54% in 2000 to 43% in 2016). Europe remains the UK’s largest trading partner for imports and exports combined.
A final factor of international trade in a “normal year” we wanted to explore was the challenges faced by SMEs. Interestingly, cross-border regulations and compliance are the biggest concern for SMEs. This is ahead of Brexit when this issue is set to get more complex. Removing many fast tracking measures that organisations have relied on.
Our findings around COVID-19’s effect on SMEs was, unsurprisingly, devastating. 25% of our community has stopped international trading due to COVID-19 – that’s 1.18 million small businesses. As well, exports have decreased by around 10%. This means that the reduction in exports from SMEs alone will be costing the UK £20 billion this year.
There were some reassuring findings, however. Although we have identified that 25% of SMEs have halted international trade. Those who have been able to continue have been retaining similar positive impacts to their bottom lines. In fact, there has been an increase in the percentage of SMEs achieving a larger 25% to 50% or 50% plus contribution to their bottom line.
On top of the 25% of internationally trading SMEs who have halted activity because of COVID this year, another 6% have done the same because of Brexit. This increases the amount of small businesses who have halted international trade from 1.18 million to 1.5 million. On top of this, 11% will stop trading post-Brexit and 11% simply aren’t sure how their international trade will be affected.
It’s not all bad news, however. It looks like our ties with Europe will stay strong. 75% of us continuing to keep the continent as a primary trade partner. Furthermore, the impacts of Brexit that SMEs are most positive about are potential new trade deals (37%) and the freedom associated with leaving the single market (31%).
But, the small business community is concerned about the challenges as well. 60% of SMEs are worried about the negative impact of high costs, 53% the impact of delays of sending and receiving goods, and 49% the impact of increased paperwork.
It’s important to remember that there is help out there. Institutions like the Department for International Trade, who can aid your business with tailored support, or government schemes such as VAT deferral or the Small Business Grant Funding, are essential resources for SMEs during the next few months and beyond. We dedicated a section to the places you can go to for help in the report so we recommend checking it out.
One of the main concerns that SMEs have when trading internationally, COVID or no COVID, is the impact on their bottom line of FX fees. But, you can now wave goodbye to international payment fees with our new card for small businesses. The top benefits are:
Zero fees, no card charges and no FX fees (yeah — you heard that right!)
Check out our snazzy new multi-currency debit card for SMEs here.
Download our full Britain Back in Business report for more insights and advice on what to do if your business is affected by the pandemic or Brexit here.
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