More than half of SMEs look towards new markets
More than a third (34%) of small and medium enterprises in the UK are looking to expand abroad in the near future, while another 30% intend to target untapped home markets, according to a new report.
The Albion Growth Report polled more than 1,000 SMEs to look at factors that both encourage and hinder growth. It found that medium sized companies were more likely to be considering expanding into new markets than smaller ones.
Market expansion is generally considered to be one of the best ways to encourage growth, which can prevent a business from stagnating and potentially spiralling into the sort of situation that can lead to insolvency.
Expanding into new markets is not the only possible path to growth however. Some 15% of SMEs said they aimed to grow by launching new products and improving or introducing online services.
Manufacturing companies were the most likely to be considering entry into new markets. Exactly three quarters (75%) of such businesses said they were considering this type of expansion, compared to 68% of those involved in media, marketing and advertising and 56% working in IT and telecoms.
Entering new markets can be challenging, particularly when expanding abroad rather than domestically.
More than half (52%) of businesses that had recently reached into new markets reported that they had experienced problems. 13% said they suffered from a lack of expertise and a further 13% cited regulatory obstacles. 12% who had taken the plunge said strong competition was a problem and the same proportion complained about a lack of demand for their products or services.
Companies based in the education sector were the most likely to experience problems, with 61% saying they had encountered issues when trying to break into new markets. Manufacturing and transport and distribution companies were the next most likely to experience problems (59% and 57% respectively).
In regional terms, companies based in London (66%) were the most likely to be looking to enter new markets within the next two years. Welsh SMEs were the least inclined, with only 50% saying they were looking to break into new markets.
By Phil Smith