The importance of international growth for SMEs

The Association of Chartered Certified Accountants (ACCA) has recently produced a study: Scale-up Success: What do SMEs need to supercharge their growth? The study involved companies with 250 employees or less and considered how to approach the management and governance of aiding their future growth.

As well as this, ACCA has taken into consideration 1,240 private sector businesses in order to most effectively provide an overview of international trade concerns among SMEs worldwide.

ACCA has revealed that 16% of these companies around the world have accessed advice on international trading when they have been in the process of growing their business. 11% of these companies have done so amid Brexit uncertainty; UK SMEs have sought international trade advice during this time. However, interestingly, Vietnam, Hong Kong, and Singapore are almost twice as likely to seek out this information compared to UK businesses.

24% of SMEs revealed their intentions to undertake international trade activities in the next three years when in the process of growing their business. Although UK SMEs are nine times less likely to use alternative sources of funding for this when compared to Hong Kong, Malaysia, Singapore, and Vietnam.

Jamie Lyon, interim director of professional insights at ACCA, said: “Growth can come at any stage of an SME’s life-cycle. This requires business leaders to think strategically about the steps they can take to enable it. SMEs with high growth ambitions often tend to have an international outlook from the outset of their business journeys.”

ACCA’s study has really highlighted the importance of seeking external advice – notably external funding networks – as one of the most important ways in which to deliver on an organisation’s long-term growth potential.

“Growth prospects can be supported if SMEs build a governance structure from the outset of their business journey,” Lyon continued. “It is important to establish a management team that encompasses the broader skills and experience required to help expand the organisation.”

The state of the domestic market and the uncertainty surrounding the global trade environment are allegedly some of the biggest barriers across the globe for SMEs.

“Use external advice to develop what you have—SMEs can help improve their resilience by developing relationships with relevant sources of external advice,” said Lyon.

The interim director also emphasised that there is a difference between ASEAN markets and the UK, and this is clearly shown through the difference in internationalised focuses and technology adoption.

He concluded: “ASEAN markets tend to be more internationalised, given places like Singapore are massive international trade hubs and are also situated in close proximity to China.

“The UK’s SME funding markets are notoriously concentrated—about 80% of the UK SME lending is owned by the big four banks. Building an external funding network is crucial. Through building the right network, businesses looking to scale-up may find external funding more accessible.”