Despite its challenges, the pandemic uncovered a significant cross-border opportunity for small and medium-sized businesses (SMBs) around the globe, as nearly half (46%) now operate internationally, according to new research from Wise. With more small businesses shifting online to meet new pandemic and consumer demands, cross-border sales are skyrocketing. This is due to e-commerce and online transactions reaching unprecedented heights, enabling small businesses to think globally and expand beyond local markets.
However, this seemingly beneficial opportunity has also been met with unique challenges, as over half (56%) of small businesses surveyed by Wise note they’ve been discouraged or prevented from expanding internationally for varying reasons. Among these small businesses, payments emerged as a top challenge — 51% listed factors related to the cost and complexity of making and managing international payments as a major deterrent to venturing or further expanding overseas. Other reasons include a lack of capital or resources (29%) and cultural or language considerations (29%).
These predicaments can waste precious time and money, which small businesses can’t afford to lose, especially given that cross-border expansion is an attainable goal if you take the right measures. For those considering international growth, this includes increasing awareness of new financial management solutions, taking a different approach to hiring new staff, and doing business like a local when operating abroad.
Here are several essential tips to make global expansion a reality this year.
Finding the Right Financial Management Solutions to Go Global
When it comes to international growth, small businesses seldom have the time or human resources needed to find and put in place critical financial management tools, particularly when these options can seem overwhelming and confusing. That’s why doing your due diligence before you expand is so imperative to putting in place the programs and platforms that fit your specific business needs.
For a start, consider bringing in financial solutions that support international businesses, such as a new bank account, to help cut exchange rate costs and fees that are frequently hidden during traditional international transactions. Look for options that provide easier ways to manage cash flow, including handling expenses, paying employees, and undergoing customer transactions.
Another way to set your international business up for success is to streamline invoicing. Invoicing apps, such as Intuit QuickBooks or Xero, enable you to track international payments more efficiently—ultimately saving time and money in the process. This is especially important because late payments on past due invoices are one of the most common problems for small businesses, especially if you have customers overseas.
Together, these options can help better manage international banking and payments and create a clearer path towards global expansion in a much cheaper and easier way.
Think Differently About Your Workforce
Instituting new financial management tools is a start, but you must also consider workforce management as part of expansions. The idea of working remotely, which before 2020 was an opportunity for only a small percentage of workers, is now seemingly expected when attracting and retaining talent.
The result for small business owners is that providing flexibility is now key to developing an inclusive and diverse workforce, particularly when heading abroad. For those operating in or moving into new markets, hiring local employees who can work remotely gives your business a considerable advantage. Local employees give foreign small businesses a better understanding of their new market and audience while allowing leaders to focus on key growth areas like operations and marketing.
Separately, more tedious, everyday tasks like billing or accounting can be outsourced globally at lower rates, which creates a significant benefit in scaling operations up or down without impacting personnel being directly employed.
Together, these two shifts in operations and management will help make doing business overseas easier and more efficient and should be prioritized from the start of any overseas growth.
Do Business Like a Local
Similar to embracing local talent in your expansion strategy, understanding the local financial landscape is key to sustained international success. That’s why making sure that you have created a seamless way for your international customers to pay in their own currency is crucial. Allowing customers to do so creates trust and familiarity with your business and, in the process, makes it easier for them to return for additional needs.
To cultivate this customer experience, you should consider an international bank account, like the Wise Business account. These accounts allow businesses to send and receive multiple currencies without high recipient or conversion fees, benefiting both your customers and the overall company.
While it might sound like the odds are stacked against expansion, many small businesses have built their global presence successfully leveraging these helpful tips. This past year proved there are no signs of small businesses slowing down in their pursuit to expand globally, and as you look to help your business get ahead in 2022, it will be essential to keep these tactics in mind.
Ryan Zagone is Head of Americas, Wise for Banks