Delivering success in international SME exports

It started as a side hustle. Summer Obaid and her husband and business partner, Omar, began selling his artwork nine years ago. Today, their 10-person-strong business, Abstract House, has become the UK’s most loved sustainable art gallery. The company designs, manufactures and ships original art and frames to customers in 70 countries worldwide and boasts a trade client list that includes TikTok, Netflix and Aviva. 

Their international success didn’t happen overnight. Shortly after launching the business in 2017, website data revealed interest from overseas, but exporting proved a challenge. “Shipping was incredibly complicated,” says Summer Obaid. “Every way we tried to ship, the items kept being shipped back to us. There was a period when we had to halt exporting completely because it was costing us money and reputational damage.”

It’s an experience that’s common for small- and medium-sized businesses at the beginning of their exporting journeys. But it can be avoided with the right insights, partners and planning.

A 2023 survey of 2,300 SME exports by the British Chambers of Commerce cited three main cost pressures for UK SME exporters: energy (72%), labour (67%) and raw materials (61%). UK Export Finance (UKEF) is the UK’s export credit agency and helps SMEs to fulfil orders if cash flow is an issue. It partners with banks including Lloyds, Barclays, NatWest and Santander to provide bank guarantee schemes. This guarantees the bank’s non-payment risk from that exporter when it provides them with business loans.

Amy Clarke, UKEF’s head of short-term business, says: “The banks come to us with their customers and say: ‘This is an SME, they want to increase their export levels or start exporting, and we’d like to help them. But we’re not willing to take all of the credit risk. We’ll take X amount if you can guarantee up to 80% of it.’ We then speak to the SME and see if they meet our criteria. For example, have they exported before? Do they have a good credit rating? You can be a first-time exporter, too, but most SMEs we deal with have some experience.”   

Despite other potential challenges such as tariffs, quotas, and regulations, SMEs can successfully navigate trade barriers with the right delivery partner and support. Expert insight can make these obstacles manageable, leading to growth and making export ventures more efficient and attractive to both the business and consumers.

Mike Wilson, the founder of exporting consultancy, Go Exporting, is a man many turn to. “We have a scoring system where you can compare one country to another, taking into account market size and potential growth as well as barriers to entry and the rules and regulations to get in there,” he says. “You also need to assess the level of competition and how difficult it is to transport your goods to and through that country.” Wilson has a network of consultants in 40 countries to build an accurate picture of the challenge and create a league table. This ensures SMEs focus their resources on the right markets.

Complying with border controls is another necessity for SMEs seeking to export. In 2021, Chris Salmon, a former senior policy advisor with the Cabinet Office, founded international trade consultancy clearBorder. Customs declaration forms are a common issue. “These are official documents that detail the goods being exported, such as rules of origin,” he says. “You need to accurately state the natural source of the goods as this determines the duties applied. Just because your goods are shipped from the UK doesn’t mean they originated there. If the details are wrong, a surcharge could be added or the products returned, which could result in a really poor and costly customer experience.” While this may sound like a potential headache, there is plenty of guidance and support available to help SMEs navigate customs.

SMEs that want to export to the EU are now likely to pay VAT on goods shipped to a member state, and this can provide another headache if responsibility for the bill isn’t clarified between all exporting parties in advance. “You need to be clear on who’s paying it,” adds Salmon. “If you’re selling directly to a consumer, you don’t want parcels arriving on someone’s doorstep with a VAT bill. It needs to be delivered with everything prepaid, which means that you as a seller or one of your agents has to be covering things like that and duties.” Again, preparation is key here – SMEs with the right support and partners are well-positioned for success. While successful exporting comes with a bit of homework, the payoff can be great.

After halting its exporting operations all those years ago, Abstract House has begun exporting overseas again with trusted partners. Now, they have a new international market in their sights. “We have European channels, but we think there’s a massive market in Scandinavia,” says Obaid. With the right strategy and partners by their side, it’s one they seem certain to conquer.