SMEs: Growing internationally and its challenges
Globalisation is a leap forward for many small businesses
Internationalisation is a leap forward for many small businesses as it opens them to new business opportunities and allows them to innovate and expand beyond their home market. In 2016, a survey that was conducted by a foreign exchange company, USForex, found that about 58% of small businesses have already gained international customers and 96% are open to the idea of conducting their business abroad. However, while internationalisation is indeed a strategic imperative, it comes with a set of challenges.
What is internationalisation?
Internationalisation is the process of increasing business footprint and capturing greater market share outside of the home country. In other words, internationalisation is designing services that can be enjoyed in many countries, such as releasing new products that are engineered for the new target market or creating a website with multiple languages that can be accessed in various regions.
By being highly interconnected through cross-border commerce, internationalisation is what helped many countries to advance towards a state of globalisation and improve their economic well-being. And for SMEs, internationalisation greatly helps with business innovation, high turnover, and employment growth. Despite its many benefits, many SMEs find it difficult to expand their business to international markets. Here’s why…
The common challenges of internationalisation
1. Cultural nuances
When planning to expand into international waters, business owners must do cultural research to fully understand the new territory they’re entering. This is because one of the most common challenges faced by SMEs upon internationalisation is cultural differences. For instance, the colour white may represent purity in Western society, but in many Asian cultures, it represents death and mourning. By understanding cultural nuances, you can avoid using specific colours, numbers, images, or words that may offend the locals and instead, leverage this knowledge to better attract them.
2. Hiring local talent
Cultural diversity is very important in a business, and hiring local talents that understand the brand and culture is just as important. Sometimes, to get your brand name across, it’s not all about marketing and promotions. Investing in your human capital is another surefire way to accelerate business expansion into the international market. Focus on getting the right people that could carry the brand and those who are always open to the idea of working in a different culture.
3. Global business transactions
Now that you’re expanding to another country, what about payments? Banks tend to focus on doing business in their home market with tedious requirements for know-your-customer (KYC) and anti-money laundering. What this means for SMEs is that examining foreign-issued papers has become a time-consuming and inconvenient process. This is why SMEs need to find affordable and convenient money transferring services that allow them to send and collect payments in multiple countries, and TranSwap’s multi-currency Global Account does that and beyond. Business owners can pay to more than 180 countries, hold up to 34 currencies, and convert anytime they want. What’s more, TranSwap can tailor a solution that best fit your business needs, including white-labelled and API solutions. Talk to our sales team if you’re interested to learn more!
4. Consumer behaviour
Consumer behaviours can be unpredictable as it is rapidly changing. But when expanding to a different country, businesses should understand that they are in a foreign market and thus, are dealing with different consumer behaviour. Questions like “What attracts consumers to buy?”, “What are their likes and dislikes?”, and “How often do they buy?” should be on every marketers’ mind. It’s important to ask these questions before releasing your brand or products in a new market so that you can tailor them to fit the local consumer needs and behaviours.
5. Risk ventures
Expanding your business abroad is an exciting yet challenging journey, therefore it must be done with proper planning and strategising. For instance, you will need to study the currency volatility between different countries to avoid currency fluctuations and see if there is any political instability to review the country’s economic security. International payment is also another risk that you must consider—how to protect your business from late and non-payments, how to manage cash flow, and what should you do if a customer refuses to pay? Before you expand your business abroad, be sure to conduct a risk analysis.
As with all businesses, the higher the risk, the higher the reward. Likewise, internationalisation carries a fair share of risks and opportunities. If you wish to expand your business globally, TranSwap offers seamless cross-border payment and other financial services that are convenient, fast, affordable, and most importantly, business-oriented. For further enquiries, send your questions here or visit our website at transwap.com.
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