With information and communication technologies undergoing tremendous expansions, and thanks to the mobile revolution, information is now available instantly and globally. A survey of 2,100 executives from SMEs in 21 countries carried out by Oxford Economics last year found that SMEs around the world, and across all industries, are making major changes to their business models and go-to-market strategies, including taking advantage of international trade.
SMEs should not shy away from the opportunities going global could provide, so how exactly can they manage international partnerships and expansion
This year, the Government delivered a Budget which saw the SME community firmly at the centre. They projected the future UK economic growth will see a stream of SMEs investing, innovating, growing and exporting.
We saw measures aimed at reducing the cost of energy and fuel, especially for labour intensive businesses; this should give UK SMEs a competitive advantage.
From a global point of view, the Chancellor supports SMEs and encourages them to fly the flag for Britain, with announcements of increased practical support from UKTI and the doubling of export finance. There was a further recognition that SMEs play a vital part in the supply chain for the economy as a whole through the 0.5bn support package for smaller house builders.
Its promising to see The Chancellor is encouraging businesses to become involved in the global economy.
Benefits of exporting
In order to effectively expand, it’s important for SMEs to build close relationships with their customers and also understand their customers customer. Having greater visibility of the supplier-buyer network is not easy to achieve, but true innovation is often built from a solid understanding of industry dynamics, drivers and relationships.
With a plethora of technologies now available, SMEs are able to harness a greater understanding of customers and their changing demands, helping to form more valuable partnerships within their business network.
As a result, SMEs can look beyond their own company to build their strengths, allowing them to better integrate with suppliers, customers and even their competitors. Whilst organisations may have the desire and optimism to change their business, without the right tools in place to execute their objectives, their ambitions are unlikely to become a reality.
Barriers for growth
Typically, barriers to entry for SMEs are seen through uncertainty and financial constraints. Its no surprise as when entering new markets, many considerations have to be made. There will be political, economic, social, legal and, of course, technical.
As such, the first step is to conduct thorough research and ensure the move into unfamiliar territory is a strategic one. Partnering up with local SMEs engages local interest, and will support your business when adapting UK practises to meet demands of different cultures and needs.
Government programmes such as UKTI & TATA mentoring and partnership programme help UK SMEs work alongside organisations in other parts of the world. Leveraging the support that is available will help overcome some of the barriers to growing overseas. At a simpler level, it’s possible to engage overseas through simple tools such as social media. By following, and interacting with international businesses, you can easily stay up to date with what they are up to, build contacts and gain relationships.
Advantages of investing oversea
According to the Oxford Economics survey, over half of global respondents stated that they are seeing benefits through forming partnerships with suppliers and other vendors located in countries outside their home markets.
More so, by operating on a global level, SMEs can reap significant advantages through not only seeking new markets, but also new talent. As demand for specialist roles such as data scientists continues, being able to open up to a global talent pool will provide SMEs with the expertise needed in order to successful grow.
So what does going global actually mean For some it is defined by growth and ambition, for others the idea can be overwhelming and may not be sustainable. For me, it reflects opportunities that SMEs have in todays globally connected environment. Those who take advantage of the global economy and think bigger, will be the ones who succeed and grow faster.
Conor Shaw is Vice President of General Business and Partner Ecosystem at SAP.