The leaders of UK mid-market businesses are driving an investment surge as they focus on international expansion. Our latest International Business Report (IBR) examines what they're doing to give themselves a competitive edge.
Despite geopolitical and economic uncertainty, UK mid-market firms continue to see the importance of international expansion as a key driver for future growth.
From acquiring new customers to accessing new talent pools and skilled workers around the world, business leaders know that finding new markets not only helps them grow, but also diversifies risk on the demand and supply side of their business.
Trading in foreign markets offers significant opportunity, but means competing against firms that are already established locally. Ensuring they have the skills, brand, and the technology to stand out from their rivals is now a focus for businesses.
UK mid-market firms with international ambitions are investing in skills.
62% of those UK businesses planning to increase their focus on international markets say they'll increase investment in their people and 66% expect to employ more staff over the next 12 months.
A strong international brand can help firms establish a customer base, and develop new networks, but it's also vital in allowing firms to attract new talent.
Two in every three (64%) UK mid-market firms looking to expand internationally plan to increase investment in their brand, highlighting how business leaders are aiming to differentiate from competitors and increase the visibility of their offering.
Internationally-focused firms know that they need to innovate to stay ahead.
Of those UK mid-market firms that plan to increase their strategic focus on international markets over the year ahead, 68% are also increasing their investment in research and development, while 62% say they'll increase their investment in technology.
For mid-market firms looking to move into international markets, it's essential leaders do their research thoroughly to understand the markets they plan to expand into.
Business leaders could face very different issues in locations potentially thousands of miles away from their domestic market. They need to have knowledge of their customers, be aware of the opportunities within the supply chain, and understand the rules and regulations of each specific market. Coupled with this knowledge, leaders need to be ambitious and have a willingness to take considered risks, particularly given the geopolitical instability across the globe and the number of elections taking place worldwide this year.
Working with partners on the ground to better understand local market dynamics can be invaluable. By leveraging these relationships, business leaders can improve their ability to impact new markets, helping to establish themselves and create value at speed.
The IBR data shows that, among mid-sized firms, there's an ongoing focus on sustainability. 60% of UK mid-market firms are investing in sustainable initiatives, compared to 54% globally.
The focus on sustainable initiatives is partly driven by governments around the world urging companies to reduce their environmental footprint, through tax incentives and regulation. But firms are also investing in sustainability measures because their customers and staff expect change which is measured and demonstrated.
36% of UK firms say sustainability is one of the most important factors when making international supply chain decisions and demonstrates efforts to meet local ESG regulatory expectations and give a competitive edge in these markets.
Mid-market business leaders are overcoming barriers to growth by focusing on quality, not only in their technology, skills and talent, but also through their supply chains. Our data shows that the number one reason for UK businesses to expand into new markets is to boost supply chain quality (44%).
With 42% of UK mid-market companies planning to increase the number of countries they sell to this year, and 43% expecting an increase in revenue from non-domestic markets, understanding the destinations helps to see the strategic direction firms take.
Unsurprisingly, the world’s economic power houses are seen as the greatest opportunities, with the US taking the top spot for revenue growth.
Additionally, of the 48% expecting an increase in exports over the next 12 months, the US is also the top destination, followed by France and Germany.
The fact that firms are confident in their prospects for growth, even within an uncertain global climate, shows the entrepreneurial zeal of these firms. Importantly, they also feel they have the systems and teams in place to overcome challenges that may come their way. Indeed, almost all UK businesses (95%) report that, based on past geopolitical and economic experiences, they're prepared for future unforeseen circumstances.
Our research shows the complexities of international expansion, and that the mid-market is carefully considering all aspects of it. To make digesting it more manageable, here are the key considerations to take forward in your own plans.
Fiona is a partner and the firm’s IBC Director acting as the main point of contact in coordinating cross-border opportunities, liaising with the relevant experts anywhere in the global network to provide the right support.
Visit our global page for the full International Business report research results, which looks how the results differ across industry sectors and countries.
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