5 Tips for Small Business to Compete in a Global Economy

Given its many advantages, the prospect of branching OUT overseas can be a tantalizing one for any business. However, this undertaking needs to be meticulously analyzed and researched, as it can present numerous pitfalls, especially for small or emerging companies. Going global can be costly and even disrupt usual business activities over the short term. Nevertheless, if done right, the benefits of overseas expansion far outweigh the potential risks involved. Here are five tips for getting there:

Cultural Flexibility

The cultural differences you will encounter when conducting business in a foreign country can hinder your progress. This applies to both your future customers, employees, as well as your local partners. Effective communication streamlines the entire organizational process, but when working in a cross-cultural environment, many businesses are getting “lost in translation.”

Some cultures prefer to be direct while others opt for a more nuanced and diplomatic approach. Understanding and integrating these intrinsic behavioral subtleties will spare you a lot of headaches over the long-term.

Establishing a Beachhead

A permanent physical presence overseas may not be essential in the first phase of the process, but it will become increasingly more important over time. Putting together a team to take on the responsibilities of that overseas expansion and establishing new connections and relationships with local businesses a priority that will require boots on the ground and a home base.

Owning or leasing an office at this early stage can be a prohibitive expense. Holding business conferences with local partners or utilizing meeting room hire services at an executive center is a far better alternative at this point as it can offer you flexibility and save costs.

Knowing the Market

Performing due diligence prior to the expansion can make or break this transition. Understanding the local market and how it will respond to your product should be the foundation of your business plan. Performing a SWOT analysis or other textbook marketing analysis techniques will offer you a much clearer picture of what to expect and how to operate overseas.

Legal Preparedness

Laws and regulations differ from one country to another, and most governments have strict requirements for any new offshore companies. It is thus imperative that you fully understand the legal landscape to operate in that country. Likewise, create localized commercial agreements and examine industry-specific regulations to make sure that you have all the certificates required and are in compliance with the law. Some countries are also highly litigious, so make sure that all legal protections are put in place to avoid any unnecessary risks and liabilities.

Financing

As with most expanding ventures, you may also need financing. One of the most popular sources of financing for businesses looking to expand internationally is the Export-Import Bank of the United States, or Ex-Im Bank, as it is sometimes known.

This bank is an independent US government agency that guarantees working capital loans, or repayment of loans, credit insurance, and other such similar services to US exporters. With the exception of military or military-related products, the Ex-Im Bank will finance the export of all types of goods and services as long as you have at least 50% US content.

All in all, expanding your small business overseas is not something that you should attempt without thorough knowledge and preparation. If on a tight budget, you can ill afford to make any mistakes, so careful planning is required. With due diligence and attention to detail, going global can yield outstanding results and offer exceptional opportunities for growth.