A guide for SMEs aiming to expand globally A guide for SMEs aiming to expand globally

A guide for SMEs aiming to expand globally
30 Nov 2015

International strategy and global expansion are getting more important for small and medium-sized enterprises. The opportunities in new consumer markets, access to more affordable talent pools and decreased manufacturing expense can help propel SMEs past growth plateaus and can act as a hedge against domestic market volatility.

Larger enterprises have benefited from global markets and it’s quickly becoming apparent for SMEs that an agile approach to global expansion can accelerate growth and decrease risk. Making the step into global markets is by no means an overnight decision, so we have put together some ‘bigger picture’ ideas on how SMEs can successfully expand overseas.

Incremental and agile approach v ‘waterfall’

Many SMEs are seeing success in taking an agile or minimum viable product (MVP) approach to their international expansion strategy versus setting a 10- year plan that doesn’t adapt as the company learns incountry. SMEs should test the market from a sales and operations perspective first to see if the market can justify further investment in infrastructure and fixed assets. The key is to have an overall strategy and goals, but keep the flexibility to adapt to changes.

Light infrastructure footprint

As a follow-up to the previous point, many SMEs find more success if they hold off on any infrastructure investments or hard costs in foreign markets until their operation has matured in the market.

Strong full-time human presence in country

Strong employees (both local and expats) are an SME’s best resource in a new market. They can pinpoint other unforeseen opportunities, evaluate market penetration plans on a day-to-day basis and adjust where necessary. Contractors on average do not typically have the same level of buy-in to company objectives and can miss opportunities. Develop and document procedures to embrace foreign employees. Too many companies treat them as firing employees and don’t provide them with the proper resources, oversight and high-level of engagement

Clear product/market strategy should include:

• The development of ‘leading edge’ products to enable the company to expand from its existing markets into new countries and regions.
• Related diversification into systems that can be incorporated into other companies’ products.
• Use of ‘associates’ in particular overseas markets to monitor developments, identify opportunities and maintain contacts with decision makers.
• If a product is not doing well domestically, do not automatically assume that it will do better overseas

Revenue gains

Use revenue gains in International markets to fund domestic reinvestment in product development. Sometimes competition in your domestic markets can pinch cash flow enough to limit your ability to reinvest in product development. Choose international markets to get your standard product/service where competition is low and use that extra revenue to reinvest in product domestically and continue to gain market share. Picking the right international market Revenue gains

Use revenue gains in International markets to fund domestic reinvestment in product development. Sometimes competition in your domestic markets can pinch cash flow enough to limit your ability to reinvest in product development. Choose international markets to get your standard product/service where competition is low and use that extra revenue to reinvest in product domestically and continue to gain market share. Picking the right international market to get your product into in a lean fashion could help you keep outside capital sources at bay and increase your equity.

Technology

Utilise technology and service oriented approach. Video hangouts, online project management tools, and the sharing economy have made is so accountability, communication and risk mitigation can be managed from thousands of miles away and you do not have to reinvent the wheel.

The right global expansion partner We’ve found that the right partner can mean all the difference in an SMEs’ success. There are three major points to keep in mind when assessing a global expansion partner:

• Their team has years of in-house experience
• They have extensive references and are willing to share their Net Promoter Score (NPS)
• They have an extensive network of service providers and strong relationships.

And finally, make sure that you have a clear, proactive international strategy.

Many traditional SMEs tend to react to an outside opportunity, which forces an ad hoc international strategy. Typically this leads to internal reluctance from management, slow pace and single market approach. Having a clear strategy to attack multiple markets at once and getting the internal buy in from the team leads to much higher success rates in country and a faster pace of international growth

The number one success factor for developing international markets is the level of support from the senior executive team

Contributed by Ben Wright, CEO at Velocity Global, a global employment services company. With capabilities across over 166 countries, the company is a leader in agile global expansion.

International strategy and global expansion are getting more important for small and medium-sized enterprises. The opportunities in new consumer markets, access to more affordable talent pools and decreased manufacturing expense can help propel SMEs past growth plateaus and can act as a hedge against domestic market volatility.

Larger enterprises have benefited from global markets and it’s quickly becoming apparent for SMEs that an agile approach to global expansion can accelerate growth and decrease risk. Making the step into global markets is by no means an overnight decision, so we have put together some ‘bigger picture’ ideas on how SMEs can successfully expand overseas.

Incremental and agile approach v ‘waterfall’

Many SMEs are seeing success in taking an agile or minimum viable product (MVP) approach to their international expansion strategy versus setting a 10- year plan that doesn’t adapt as the company learns incountry. SMEs should test the market from a sales and operations perspective first to see if the market can justify further investment in infrastructure and fixed assets. The key is to have an overall strategy and goals, but keep the flexibility to adapt to changes.

Light infrastructure footprint

As a follow-up to the previous point, many SMEs find more success if they hold off on any infrastructure investments or hard costs in foreign markets until their operation has matured in the market.

Strong full-time human presence in country

Strong employees (both local and expats) are an SME’s best resource in a new market. They can pinpoint other unforeseen opportunities, evaluate market penetration plans on a day-to-day basis and adjust where necessary. Contractors on average do not typically have the same level of buy-in to company objectives and can miss opportunities. Develop and document procedures to embrace foreign employees. Too many companies treat them as firing employees and don’t provide them with the proper resources, oversight and high-level of engagement

Clear product/market strategy should include:

• The development of ‘leading edge’ products to enable the company to expand from its existing markets into new countries and regions.
• Related diversification into systems that can be incorporated into other companies’ products.
• Use of ‘associates’ in particular overseas markets to monitor developments, identify opportunities and maintain contacts with decision makers.
• If a product is not doing well domestically, do not automatically assume that it will do better overseas

Revenue gains

Use revenue gains in International markets to fund domestic reinvestment in product development. Sometimes competition in your domestic markets can pinch cash flow enough to limit your ability to reinvest in product development. Choose international markets to get your standard product/service where competition is low and use that extra revenue to reinvest in product domestically and continue to gain market share. Picking the right international market Revenue gains

Use revenue gains in International markets to fund domestic reinvestment in product development. Sometimes competition in your domestic markets can pinch cash flow enough to limit your ability to reinvest in product development. Choose international markets to get your standard product/service where competition is low and use that extra revenue to reinvest in product domestically and continue to gain market share. Picking the right international market to get your product into in a lean fashion could help you keep outside capital sources at bay and increase your equity.

Technology

Utilise technology and service oriented approach. Video hangouts, online project management tools, and the sharing economy have made is so accountability, communication and risk mitigation can be managed from thousands of miles away and you do not have to reinvent the wheel.

The right global expansion partner We’ve found that the right partner can mean all the difference in an SMEs’ success. There are three major points to keep in mind when assessing a global expansion partner:

• Their team has years of in-house experience
• They have extensive references and are willing to share their Net Promoter Score (NPS)
• They have an extensive network of service providers and strong relationships.

And finally, make sure that you have a clear, proactive international strategy.

Many traditional SMEs tend to react to an outside opportunity, which forces an ad hoc international strategy. Typically this leads to internal reluctance from management, slow pace and single market approach. Having a clear strategy to attack multiple markets at once and getting the internal buy in from the team leads to much higher success rates in country and a faster pace of international growth

The number one success factor for developing international markets is the level of support from the senior executive team

Contributed by Ben Wright, CEO at Velocity Global, a global employment services company. With capabilities across over 166 countries, the company is a leader in agile global expansion.