More than half (57%) of SME owners plan to expand trade to new territories outside the EU and at home after the pandemic with the help of online tools, according to global small business platform, Xero.
The boom in e-commerce and new EU trading conditions are driving many SMEs to break into fresh territories and customer segments. According to Xero’s Future of Small Business report, more than a third (36%) say it’s too expensive to sell to European countries, due to Brexit trading regulations and import-export charges.
This hasn’t dampened small business ambitions. It’s pushed 44% to explore new markets for the first time, with one third (33 per cent) increasing their customer base geographically during the pandemic due to a bigger focus on borderless e-commerce sales.
A THIRD OF SMALL BUSINESSES INCREASED THEIR CUSTOMER BASE GEOGRAPHICALLY DURING THE PANDEMIC DUE TO A FOCUS ON BORDERLESS E-COMMERCE SALES, AS COMPANIES QUICKLY ADAPTED AND EMBRACED NEW TECHNOLOGIES
The rise in remote working and rapid adoption of new technology has made it much easier to sell beyond physical location. 2 in 5 (41 per cent) say that online tools have been key for targeting new customers both at home and abroad. And 34% of SME owners are now more willing to hire staff that are completely remote as a result of Covid.
“The way small businesses operate on a global scale is transforming and it’s positive to see the impact of Covid and Brexit hasn’t dampened their ambitions. Technology and automated software in particular – like e-commerce platforms – have undoubtedly opened up trade opportunities for small businesses, allowing them to trade both across the UK and further afield,” said Donna Torres, director of small business at Xero.
Max Henderson, Co-Founder of Hotpod Yoga, also commented: “Dealing simultaneously with a global health pandemic and Brexit, has certainly been challenging. Luckily for us, the reaction in the UK since lockdown restrictions eased has been extraordinary and we’re seeing our classes hit 100% capacity across the whole country.
“This kind of rebound has meant we're back on the front foot and looking to launch around 40 new locations across the UK and Europe within 12 months - but with that comes a lot of work to understand the rules of operating in different markets and of course a large amount of paperwork for things like customs and rules of origin. We’re yet to see the immediate effects of Brexit on trading, with cross-continental trade having been put on hold due to various lockdown restrictions in each market, but given our success in the UK, we’re optimistic about the opportunity.”
Thea Paraskevaides, Founder of Beaumont Music, explained her situation: “Due to Brexit we've had to register for VAT in six countries which we were already distributing to. The amount of paperwork this has come with is overwhelming but using digital software like Xero has made the process far more streamlined.”
Xero has a dedicated Brexit Hub - here - with advice and resources to help businesses stay up to date.
The survey was conducted in January and February 2021 by Censuswide with 500 SME owners and 2,000 consumers.