How can SMEs go global?
DOMINIQUE SY
The impact of globalization has sparked debate in both the public and the private sectors.
However, one thing is for certain—it has irrevocably changed the way businesses operate and thrive.
Every year, we see more and more companies enter the international market to mixed results. Among the benefits a company can gain from a good international strategy are growth acceleration, reduced vulnerability to domestic risks, and access to global talent.
Although the lion’s share of international firms are large enterprises, there is no reason for SMEs not to go global just as successfully.
Needless to say, the decision to expand internationally should only be made after proper assessment and development of the firm’s existing capabilities.
Here are some important considerations for small businesses thinking of scaling globally.
Agile expansion: Going global involves adapting very quickly to the different in-country preferences and environment. Because of this, small businesses should capitalize on their inherent flexibility and leanness to expand successfully.
In the early stages of international expansion, a lean approach would be ideal for small businesses that can learn, build, and develop much faster than large enterprises.
The Minimum Viable Product approach and continuous iteration of products would enable the company to decide whether
Be Proactive: Rather than reacting to external opportunities, SMEs should be proactive in considering multi-market approaches with due diligence and research. Senior management must ensure that the international expansion strategy is done with consideration to macro factors, rather than a roughshod ad hoc approach. These factors include the geographic, cultural, and industry proximity of the target market. Once this is accomplished, they must then obtain a high level of internal support from the team for a faster pace of international growth.
Clear market strategy: The successful entry into new markets relies heavily on clear strategy. This includes excellent product development, strengthening of linkages, and appointment of local decision-makers. For product development, many knowledge-intensive firms create global offerings distinct from the domestic product line. This allows for better adoption to local preferences. As for strengthening linkages, it is important to incorporate the business into existing trade and knowledge networks to enhance the sharing of best practices. Finally, it is beneficial to appoint associates in foreign markets familiar with the local culture and business environment. Getting the perspective of a local is essential for a more tailored expansion strategy.
Domestic development: Since SMEs have limited capacity, it follows that international expansion would shift resources away from the domestic market. In this case, it may constrict cash flow and limit the company’s ability to fulfill domestic requirements. Hence, it is imperative to use the gains from international markets to increase market share and improve the product offering domestically. With First Circle’s purchase order and invoice financing solutions, your business can reach its highest potential both domestically and internationally.
Dominique Sy is a digital marketing analyst with experience in the public sector, the academe, and the private sector. She is currently part of the team behind First Circle, a fintech startup that empowers SMEs through innovative business financing. To know more about how First Circle can accelerate your business, visit www.firstcircle.ph or send an email to dominique@firstcircle.com.
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