Expanding into international market is not on every SME agenda, but for those considering it in the face of prolonged challenging domestic conditions, the big question is, “how can we afford it?”

The international market landscape for SMEs has changed notably in recent years, but with new free trade agreements in place, new opportunities are appearing for companies that are capable of targeting non-domestic sales.

Foreign target markets and barriers to development

The top five foreign target markets for British businesses according to new research from DHL Express are the US, Singapore, Australia, Japan and Hong Kong. Tellingly, there are no European countries in this group despite the size of the EU marketplace and its greater proximity to UK SMEs.

Nevertheless, DHL Express claims that the mood among exporters is positive, with long-term domestic malaise driving greater interest in international markets for over half of companies. However, such development is not without barriers.

The DHL Express study revealed that the leading obstacles to international growth are custom charges, understanding the regulatory environment and customs of foreign markets and the paperwork and logistics that are required to export goods. While foreign trade agreements are making such expansion more straightforward, challenges still clearly remain.

International expansion and how alternative finance can help

The increased focus on international markets by SMEs is encouraging, not least considering conditions at home, with global headwinds and government mismanagement combining to severely hamstring the economy.

However, looking beyond the domestic market and expanding any presence there, in particular in markets such as those outlined by DHL Express, comes at a cost, in terms of investing in systems, personnel and structure. Given the existing pressure on finances and the need to safeguard cashflow, it remains to be seen how many SMEs will make the leap.

But alternative finance can help those that do.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate (with 65% more SMEs experiencing difficulty in accessing finance from high-street banks as of August 2023).

These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

This profile has helped cement the reputation of alternative finance in the business sector, with a new study showing that more than 50% of small businesses are looking to use finance to achieve growth in 2023.

SME finance options for international market growth

Whether SMEs will be able to target markets listed by DHL Express in any significant number is debatable, but for those willing and able to countenance such growth, it is important that they have the access to finance they need to put such plans into practice. This is why it is vital firms are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.