Faced with a tough Christmas, SMBs are looking abroad

A new survey by Wise lays bare the tough trading conditions in the UK. But also a few potential gifts
Clara Nobre
Xmas tree

This year is the first since 2019 without lockdowns, face masks and Zoom dinners. That should be a cause for celebration - and yet, for many small businesses, the ghost of Christmas past cannot be left alone. This is another ‘crisis Christmas’, marked by inflation and a brutal energy crunch.

No surprise, then, that new independent research undertaken by Censuswide and commissioned by Wise shows that more than three quarters (76%) of small- and medium-sized businesses (SMBs) regard this Christmas as tough, if not tougher, than the past two. It’s hard not to feel gloomy.

Faced with yet more tough times, businesses are being forced to consider some hard choices. A minority intend to cut headcount (13%), pay (9%) and their high street presence (8%). The New Year may bring further pain.

And yet - there is still some room for optimism. It is a cliche, the sort put by banks in their advertising, to say that SMBs are resilient, innovative. But it’s also true. The past few years have proved this, and it is this toughness and dynamism that is driving SMBs’ response to a less-than-merry festive season.

In response to a lousy Christmas, SMBs are expanding their digital presence: 30% are expanding their presence online, 26% specifically on social media. In doing so, small businesses will be able to directly service and market to their customers and are perhaps showcasing the online savvy that many businesses developed during the lockdown years.

Similar numbers are looking beyond Blighty, with 24% considering overseas expansion, whether that be hiring abroad, sourcing products overseas or entering new markets. This makes sense. Not all economies are hit as hard as the UK, meaning customers may have deeper stockings abroad, while hiring and sourcing overseas is an effective way of reducing costs.

Many businesses have inspiring stories about how they are looking abroad and coping with the current economic climate. One is Spice Kitchen. The business is about as Christmassy as it gets: a mother-son company that began life as an idea shared over Christmas dinner in 2012. This year it won the UK’s prestigious ‘Gift of the Year’ award for their beautiful sari-wrapped spice tins.

Despite all this, Spice Kitchen has seen online sales drop 50% this year compared to the past two Christmases. For such a festive-friendly business, this is quite something. And yet, the business is finding a way through: increasing wholesale sales and expanding to new markets and expanding its presence in places like the US and the Middle East.

Overseas growth doesn’t work for all businesses, and for any it’s a challenging venture. However, it can provide some opportunities - a valuable thing in current times.

To capitalise on this, it’s essential small businesses have access to the financial services they need - and yet, 24% of SMBs have been put off overseas expansion by the high cost and inconvenience of international banking services.

This is not good enough and it’s why the sector is changing. The past decade has seen fintechs revolutionise SMB finance, with their agility and efficiency meaning they can better serve and understand what is seen as a ‘low margin’ customer base by banks. This means international expansion is far more viable for SMBs. At Wise Business, we focus on reducing the time and cost of international banking, meaning it's easier for SMBs to compete abroad.

Overseas expansion is not a possibility for every business this Christmas, but it can be a salvation for some. By using fintechs, SMBs can find margin where previously there was none, and find customers in markets that used to be impenetrable. As another tough Christmas bites, it’s essential small businesses get the support they deserve and demand.

Written by
Clara Nobre
Written by
December 20, 2022