Despite its obvious advantages, it appears as though SMEs throughout the UK have an inherent reluctance to export their goods (and services) overseas. This is a long-standing issue that defines the British economy, and one that continues to restrict growth within an already challenging financial and political climate.
The precise reasons for this remain a mystery, as any economist worth their salt will testify that expanding a business into international markets in an effective and organic way of achieving growth. Perhaps the biggest issue is the perceived lack of expertise and resources that exist within smaller businesses, as many fear that they will become stretched and ultimately unable to maintain the necessary quality of service to their existing customers.
Despite these challenges, however, ambitious, informed and organised SMEs have a unique opportunity to prosper in the international marketplace. This is so long as they heed the lessons taught by the emergence of remote working within the workplace, which has already enabled small business-owners to expand their infrastructures and tap into a global workforce. With 72% of professionals now of the belief that traditional office culture is no longer relevant, it is time to re-imagine your venture and fulfill your ambition of becoming a globally-renowned brand.
With this in mind, here are some steps that will help you to take your domestic SME and launch it internationally: –
Start Small and Trial Your Products Through an Online Marketplace
In general terms, you should look to start small when taking your first steps in the international marketplace. After all, making a large-scale commitment will require a significant investment, and it is crucial that your trial your unique products and services overseas before spending your business capital.
Instead, it makes far more commercial sense to begin your journey by selling one or two products (or perhaps a small range) through a global, online marketplace. After all, a recent Pitney Bowes study confirmed that roughly half of the world’s consumers do most of their online shopping through outlets like eBay and Amazon, which in turn creates a vast global audience that you are able to target with your brand’s proposition.
Additionally, this strategy also reduces the initial cost to your business, both in terms of manufacturing (as you are minimising the product range that you sell overseas) and distribution. Even though selling through affiliate sites such as Amazon may require you to pay 10% commission on each sale, this is a small sacrifice and one that enables you to determine which (if any) of your products have the potential to generate profit on the international market.
Refine Your Market Choice Over Time
For some products, there is a universal level of demand that barely fluctuates from country to country. Take motorhomes, for example, which are popular throughout the Western world and particularly in regions such as Europe and North America. So as the UK industry reported a huge increase in sales during March of this year, this growth trend was replicated throughout the world.
For most products, however, demand fluctuates wildly across international markets and it is therefore crucial that your SME refines its global strategy over time. Most importantly, you must determine which international markets are likely to optimise your ROI, based on the nature of your product range and the target market that you have identified.
Once you have done this, you can begin to sell your products across a wider range of sites that are specific to selected countries.
While this is all well and good, the question that remains is which international markets should feature heavily in your thinking? Clearly China will spring to mind, given its huge consumer base and the recent success of the region’s Alibaba website. We would also recommend that you consider outlets in nations such as Korea, Canada or even Saudi Arabia, particularly with the former driving significant sales during the last two Cyber Weekends.
The key is to gather data and analytics that enable you to make an informed decision, however, as you look to create a tailored strategy that optimises your conversion rates.
Reduce Risk When You Begin to Trade
SMEs can also struggle with the practicalities of trading internationally, from language and cultural barriers to the risk associated with managing foreign debtors. It is therefore crucial that you simplify this process and manage risk from the outset, using your existing infrastructure and external services to help you achieve these aims.
In terms of the latter, service providers Market Invoice have innovated a trade solution that increases your SMEs working capital while also reducing the risk of dealing with overseas customers. This solution offers funding against foreign debtors, based on completed orders that have been exported and invoiced. These invoices are effectively sold for their full value, creating immediate cash flow and driving real-time growth. The money is repaid when the debtor settles the invoice, creating a simple and efficient process that make international trading more accessible to smaller firms.
This type of service is crucial if you are to replicate your domestic business model overseas, as even the most thoughtful and informed strategy can fall apart without practical assistance.
So there you have it; some insightful tips that will enable you to turn a domestic SME into an international business. Hopefully, these will remove many barrier to growth and enable you to embrace the full potential of a diverse, international marketplace that continues to grow.