Taking your SME global? Consider these risks first

If you run a small or medium-sized enterprise (SME), expanding into international markets is an opportunity with exciting growth potential. But you’re not just selling products in a new location – you’re entering a completely new and often unfamiliar legal, cultural, and economic environment. Going in unprepared can mean costly mistakes. Here’s your guide to recognising and dealing with the hidden risks of going international.

Legal and regulatory pitfalls

All countries, and sometimes regions within countries, will have their own laws around taxation, employment, and product safety and marketing. You may need specific licenses or permits, or local regulations could impact how you package or market your product – for example, you might not be able to make certain health or other claims. Non-compliance can result in hefty fines or, even worse, losing the right to trade and do business in that region.

Research cultural differences

Different regions have different expectations and norms around communication, service, and what appeals in terms of branding and marketing. What works in the UK may not translate very well abroad. Local customs and etiquette can even affect the way in which you pitch a product or negotiate a deal. It’s well worth spending time to research local behavioural customs and marketing styles so that you don’t miss out on opportunities.

Is the region politically and economically stable?

From trade policy through to economic fluctuations, there’s no doubt that global geopolitical instability has increased in recent years. A sudden change in leadership, an unexpected policy shift, or a dramatic economic dip can easily throw even the most carefully developed business plans into chaos. You might find that it’s suddenly unfeasible to even operate in the area any longer.

Research the country’s political track record along with expert analysis of emerging candidates and groups who could impact the political landscape in the long term. Also assess economic trends not only in your target country, but any countries with which it forms a trade bloc – your target market doesn’t exist in isolation.

Don’t let volatile exchange rates eat your profits

Currency exchange rates can shift fast and unexpectedly in today’s global market. If your business isn’t prepared, you could lose out with no warning. Work with an expert to create a plan for dealing with financial volatility – such as using hedging tools to lock in rates, or setting fixed transfer windows. Also, take care of your overseas business with money transfers to help you stay ahead of increasingly unpredictable currency fluctuations.

Supply chain and logistics challenges

Getting your product to consumers around the world can be a complicated endeavour that involves often-complex customs paperwork, well-run shipping logistics, and reliance on good infrastructure. If one link in the chain fails, it will impact the rest of your business. Make sure that you develop and build good relationships with in-country partners such as transport companies, couriers, and suppliers – it’s the best way to reduce delays and avoid lost shipments.

Global success starts with a risk check

For a small company, expanding overseas can be the gateway to increased growth and profits. However, you must prepare for any potential pitfalls and unforeseen events. By understanding and planning for all risk factors, you’ll be ready to take your SME global with confidence.