If, as a SME, you’re looking for a song that illustrates the ordeal you have to go through on your international development, you’d probably listen “The climb” by Miley Cyrus. It says it all:

“I can almost see it, that dream I’m dreaming,
But there’s a voice inside my head saying, “You’ll never reach it”,
Every step I’m taking, every move I make feels, lost with no direction,
(…) There’s always gonna be another mountain, I’m always gonna wanna make it move,
Always gonna be an uphill battle, sometimes I’m gonna have to lose,
Ain’t about how fast I get there, ain’t about what’s waiting on the other side,
It’s the climb.”

But SMEs seldom make it to the top, unfortunately.
And, what a shame it is, considering that SMEs are the Sherpas of our globalised world, carrying the weight of everything that is vital for our economies on their backs.

Indeed, they are the lifeblood of the global economy, acting as the vital engines driving innovation and job creation. SMEs represent a staggering 90% of all companies worldwide, employing 70% of the workforce, and contributing a significant 78% to global exports. In the European Union alone, 90 million jobs are directly linked to exports from these dynamic businesses. Yet, despite their crucial role, venturing into international markets, while offering exciting opportunities for growth, often proves to be a complex and often daunting or even lethal task for many SMEs.

The statistics paint a grim picture:

70% of SMEs globally struggle for survival on their own market, with only 30% of them surviving more than 10 years. Actually, only 5% of them exhibit strong growth and actual future prospects. This explains why so many of them consider expanding their activities abroad to find new markets.

Moreover, 70% of international expansions fail during the first year, with only 8% surviving more than 10 years, which emphasizes the vital importance of planning for the long term. Just like when attempting the Everest, only the most prepared will reach the summit or even survive the climb.

But why is that so? Because many SMEs start their international development without proper preparation, forgetting that it is not how fast you climb that matters, but if you have everything you need to make it to the top.

The first step that you should take before even leaving the base camp is to ask yourself: “Why am expanding?”. Making sure that you have strong and good reasons to allocate resources and take risks to expand your business internationally, is the first thing you need to check. This begins with carrying out an internal analysis.

Then, you need to anticipate every challenge you will encounter, so that you have what you need to weather out the storm.

Demystifying the maze: common challenges faced by SMEs

Now, while each new market, just like each mountain, is different, unique, and presents its own specific risks, there are several prominent and common factors which usually contribute to the high failure rate of SMEs embarking on international expansion:

Lack of a Clear Purpose: Expanding for the wrong reasons, such as simply following a trend or chasing the “next big thing,” is a recipe for disaster. A well-defined and achievable internationalization goal, aligned with your company’s core strengths and competencies, is crucial for success. This goal should be informed by a thorough understanding of your company’s unique value proposition and how it can address specific needs in the target market. Without a clear purpose, navigating the complexities of a new market becomes significantly more challenging.

Inadequate Market Research and Planning: Diving headfirst into a new market without thorough research on local regulations, consumer preferences, and the competitive landscape is like driving blindfolded on a winding road. Understanding the market dynamics, legal environment, cultural nuances, and existing competition is vital to tailoring strategies and ensuring smooth operations. This includes researching consumer buying habits, distribution channels, pricing strategies, and regulatory requirements specific to the target market. Without this knowledge, your company risks making crucial missteps that can hinder your expansion efforts.

Insufficient Budget Allocation: Underestimating the financial resources required for marketing, staffing, establishing local operations, and navigating compliance costs in a new market is a common pitfall. Failing to secure adequate funding can severely hamper the success of your expansion. This involves factoring in not only the initial set-up costs, but also ongoing operational expenses associated with marketing, promotions, personnel, and compliance. You need to conduct a comprehensive financial evaluation to understand the full scope of costs involved and secure the necessary resources to support your international ambitions.

Cultural Insensitivity: Ignoring or failing to understand and adapt to cultural nuances can lead to marketing blunders and difficulty connecting with your target audience. Adapting marketing messages, communication styles, and product offerings to the local context is essential for building trust and establishing a positive brand image. This may involve adapting product designs, packaging, and marketing materials to resonate with local preferences and avoiding any unintentional cultural faux pas. Ignoring cultural differences can be detrimental to building trust and establishing a successful presence in your new market.

Building the Wrong Team: Not recruiting individuals with the necessary skills, language proficiency, and cultural understanding hinders success. Building a diverse team with international experience and a strong understanding of the local market can bridge the gap between your company and your new customer base. This may involve hiring local talent with expertise in the local market and recruiting individuals possessing the necessary language skills and cultural awareness. By building a diverse and culturally sensitive team, you can ensure effective communication, navigate cultural nuances, and better understand the specific needs and preferences of your new customers.

These are just a few examples, and the specific challenges that you face will vary depending on the industry, target market, and company culture.

Artemis Business Care is here to support you all the way from the design of your strategy to its implementation in your new market, by helping you diligently addressing these common hazards, researching the market, recruiting the proper team and training them.

Click here to learn about the tailored solutions that we offer companies in their international development.

We’ll prepare you and safely guide you through passes and crevasses, ensuring your steady climb to avoid… the fall. So, don’t wait, contact Artemis Business Care. Because “Chance favours the prepared”.