How to expand your SME overseas
Exploring expanding your small or medium enterprise internationally means you’ll have various methods, benefits, and risks to evaluate. From identifying the best methods of entering international markets to considering practical needs like cross-border payments throughout the process, this blog will help you understand some of the possibilities SMEs may be faced with when expanding their business overseas.
How can SMEs expand overseas?
When thinking about taking your business international, you may have considered several methods. You might take an in-house approach and plan your own expansion process with complete control, but this requires a lot of research, preparation, and commitment.
For those with a product to sell, exporting goods to an overseas market is a common way to expand your business internationally, but transportation costs can be high, and the negative environmental impact of shipping is becoming increasingly important to consumers. Alternatively, utilising licensing agreements so overseas companies that are already active can use your intellectual property (IP) can be another good approach. If you’re comfortable increasing the exposure of your IP, this method involves an overall lower level of risk and there’s a range of different models to explore, including franchising and private labelling.
Otherwise, pursuing strategic partnerships with international businesses can help you establish a presence overseas while bridging the differences between your home market and a new one. Similarly, if you’re in a financial position to, the mergers and acquisitions route presents a quick and effective expansion opportunity. However, it can be expensive, risky, and can demand a lot of work to increase market value.
Why should you expand your SME overseas?
Increasing the countries your business is operating in can reduce dependence on your home market, both alleviating the risk of economic instability in any one market and helping to mitigate the fluctuations caused by seasonal demand cycles. Of course, you’ll also need to evaluate the barriers to entry in your chosen country as well as the benefits. To help set your business up for success, you’ll need to source the right support at the right times, irrespective of your chosen method of expansion.
With many decisions ahead, seeking trusted, high-quality support can help you identify and proactively manage the key matters that could determine the success of your business internationally. For example, it can be prudent to consult the relevant specialists when deciding whether to set up a new entity or seek a partner locally who can help you enter the new market. If the former, you may then benefit from guidance on whether establishing a representative office, a branch office, or a subsidiary is the best route. Otherwise, expanding your understanding of the cultural differences you might come up against in your new market, looking into the physical infrastructure that will be available, and preparing a foreign exchange strategy are just some of the other ways to prepare for taking this next step with your business.
What do SMEs expanding overseas need to know about foreign exchange?
Whether you’re sending large sums overseas for acquisitions or arranging cost-effective regular transfers for supplier or salary costs, speaking to a broker can help you streamline your FX requirements. At Global Reach, our SME team helps businesses like yours understand and manage their foreign exchange exposure every day. No one can predict how currencies might fluctuate, but an experienced broker can support you by putting strategies in place to help you protect your bottom line, during your expansion and beyond. Our dedicated teams can support you with FX risk management solutions, and mass payment capabilities with competitive rates of exchange.
Why should SMEs use a currency broker when expanding overseas?
Support from relevant experts with specialist knowledge is often indispensable during times of major change. Our proactive and personalised service is what sets us apart; our team works closely with SMEs, building strong relationships and providing support to navigate even the most volatile markets. Find out more about our services here.
SME? Get a free FX review
You can get a free evaluation of your foreign exchange exposure with Global Reach Insight, a no-obligation service for businesses looking to understand their foreign exchange exposure. Our Insight team are experts at identifying ways to optimise your strategy, to help give you a more efficient approach to FX while protecting your bottom line.
You can download our SME Guide to Foreign Exchange, here.