Intelligent SME.tech Issue 27 - Page 59

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UK SMES SEE OPPORTUNITY FOR EXPANSION ABROAD IN 2023

Airwallex has announced that UK-based small and medium-sized enterprises ( SMEs ) remain optimistic about international expansion next year , with almost three-quarters ( 70 %) planning to expand into – or further into – foreign markets in 2023 .

The independent research , which surveyed 500 UK SME decision-makers , considered where and how UK SMEs are planning to invest in and grow their operations abroad in 2023 and beyond .
Optimism around cross-border growth remains
Despite market turbulence tempering UK SMEs ’ ambitions around expansion plans , confidence is still high . When polled in May 2022 , 85 % of UK SMEs planned for geographical expansion – this figure has since dropped to 70 % when polled in October . However , this is still a strong demonstration of market confidence , reinforced by 68 % agreeing that they see an opportunity to scale / expand into new markets .
Of those UK SMEs planning to expand into new markets :
• Two-thirds ( 64 %) have their sights set on Europe and North America in 2023 ; this rises to 81 % when considering expansion plans over the next five years .
• One-third ( 34 %) are preparing to expand into Asia Pacific , Latin America , Africa and the Middle East . In the longer term , 60 % of respondents are considering expansion to these regions by 2028 .
Relying on talent and trusted partners for business stability and growth
Reinvesting profits ( 46 %) or relying on partnerships and affiliates ( 38 %) are the two most prevalent strategies UK SMEs are taking to finance international expansion efforts .
Only 27 % plan to rely on bank loans to finance growth into new markets .
Establishing new partnerships will be central to SME expansion strategies for 2023 : a third ( 33 %) aim to establish new trade partnerships and a quarter ( 26 %) want to build new channel partnerships .
Acquiring and retaining talent is also key to UK SMEs ’ planned expansion :
• Seven in 10 ( 71 %) admit employee retention is critical to their growth plans .
• Over a third ( 36 %) are prioritising hiring to support their expansion .
• Almost three-quarters ( 73 %) are investing in people to retain talent despite the predicted market slowdown .
Shifting to digital to reduce expenses and bolster productivity
Two-fifths ( 42 %) of UK SMEs are moving more aggressively towards digital / FinTech platforms and away from traditional banking services due to the current economic environment . While a third ( 33 %) have already adopted digital or FinTech platforms instead of traditional banking ( rising from 7 % in 2021 ), a further 41 % plan to do so in the next two years .
UK SMEs are relying on technology to not only avoid unnecessary costs but also to boost output :
• Almost three-quarters ( 71 %) are investing in technology and tools to optimise workforce productivity so they can better navigate the predicted market slowdown .
• The same proportion ( 71 %) say the economic environment makes it more important than ever for them to reduce unnecessary expenditure , like costly cross-border transaction fees . �
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