Pranav Sood, Interim Global Head of Marketing at Workiva, talks to us about the role that global infrastructure plays in international expansion plans and enabling SMEs to take advantage of global business opportunities.
The world in 2022 is more global and more digital than ever before. These two changes have created a new wave of opportunities for businesses to grow around the world; SMEs are no exception. Our latest research identified that the majority (85%) of SME decision-makers in the UK are already planning to take advantage of these opportunities.
But are these opportunities open to everyone, or only for those who have a tech-savvy mindset and the global infrastructure in place to support an international presence?
Setting sights further afield
Planning to go global and achieving it are two quite different things. While the majority of UK SMEs see the benefit of international expansion, it’s not always clear to them that they should prioritise getting there.
Stated priorities in international expansion vary quite dramatically among UK SMEs. Half prioritise winning new customers over all else when planning their expansion. Others feel differently though with 42% citing sourcing new suppliers or growing their team as higher priorities.
There is more consistency in the types of roles that businesses believe that they will need to successfully grow across borders. Roughly 80% of UK SMEs said they would prioritise finance talent and salespeople. Marketers, developers, HR and engineers also remain in high demand.
Accommodating growth
Identifying an opening in the market is only the first hurdle. Executing against an expansion plan requires SMEs to identify the local needs they have to meet, the barriers that exist to their growth and their own capability or resourcing gaps.
Growing internationally requires businesses to satisfy the expectations of local talent, customers and suppliers. By offering preferred payment methods or supporting local currencies straightforwardly and cost-effectively, you are more likely to build brand loyalty with new and existing customers, while also improving conversion at checkout. For example, iDEAL, a payment solution based on open banking, represents 70% market share in the Netherlands and is used for more than 50 million purchases per month, thus, making it the most widely used payment method for consumers. Not having these in place can be the difference between closing the deal or not.
Barriers to going global
Some barriers are more than just about meeting preferences though. One-fifth of businesses recognise that regulations, such as those relating to money laundering when sending payments across borders, will stand as a barrier to securing the talent they need. Roughly the same percentage (22%) believe that not having the right technology is the key blocker. A large percentage (44%) of UK SMEs understand that having the right infrastructure in place will help them to grow more quickly. SME decision-makers also believe that access to the best digital infrastructure would help them serve customers better (43%), attract and improve workforce diversity (39%), hire more technical positions quicker (39%) and help with regional supply chain issues (36%).
SMEs also need to recognise the gaps that exist in their businesses today. According to our research, 70% of SMEs admit that they need to modernise their digital systems before they can proceed with expansion projects. Following technology, SMEs looking to expand across borders also identified cross-border payments and FX (33%), marketing (32%) and HR capabilities as the most crucial missing parts in their current expansion plans. Shockingly, only 2% of UK and US SMEs claim to have reached the adequate level of infrastructure to hire globally.
For two-thirds (66%) of respondents across the UK and US, reluctance to recruit new staff abroad comes from fears over the significant payment and paperwork challenges that they feel unprepared to face. In particular, with their current systems in place 60% feel that managing payroll in various currencies is time-consuming and can leave the business losing out on foreign exchange rates.
Where technology and hiring challenges collide, SMEs have a clear demand for a tech solution that makes it easy and seamless to pay employees around the world in various currencies. Over half of UK SMEs (60%) agree that such a tool would give them the confidence to hire more globally.
Technology coupled with trust
Technology can also play an integral role when it comes to building trust and loyalty with customers. As we saw during the pandemic, consumers had to shift their purchasing habits. Instead of going to a brick-and-mortar store, they were not forced to shop online and use digital services which they might not have previously used. This created a unique opportunity for the more tech-forward retailers as they were no longer siloed to a specific region and could instead become location agnostic.
These retailers were also able to create operational efficiency for their business while ensuring a secure and simple payment experience for their customers. With just a few clicks consumers could safely send money in near real-time, while also having a superior customer experience – this strengthens their trust with a business and ultimately, creates customer loyalty.
How can technology provide global infrastructure?
What SMEs need when they are trying to grow overseas is the right digital infrastructure to help them hire top talent, manage local suppliers and receive payments. Paying people, buying products and selling services all require the ability to move – and manage – money globally. Most SME leaders recognise that technology can provide a solution to the challenges posed by doing business across borders. However, they should guard against splitting their core activities across multiple systems. What they should be looking for is a financial technology platform that allows them to collect funds from customers, convert them, store it and pay it out, globally.
In today’s day and age, businesses need to constantly evolve to the changes in consumer behaviours to gain a competitive edge. This means listening to your customers and finding their key drivers (i.e., price, internationalisation, security, etc) and then finding a solution to ensure they keep coming back. By leveraging technology and using innovative FinTechs to embed the right infrastructure, you can not only enhance a customer’s experience with your business but also be viewed as a global frontrunner among your peers and competitors.