Bentleys' The Voice of Australian Business, a biannual national survey of SMEs across all industries and regions, has found that only 19 per cent of respondents were operating in markets outside of Australia and New Zealand.
Of the 19 per cent of businesses that had engaged in global expansion, the majority were medium in size, as opposed to small or micro, with the USA, UK and Asia all prime expansion targets.
“SME owners can be risk-averse in thinking about going global. For them, international markets may present exciting growth and diversification opportunities but it can also present challenges. This fear often comes from a lack of knowledge in how to make the transition from a local to global business,” said Scott Field, associate director of Bentleys Queensland.
According to the survey results, the largest barriers to expansion proved to be a general lack of interest or lack of perceived value (38 per cent), followed by sheer physical distance (35 per cent) and a lack of knowledge as to how to operate a business outside of Australia (15 per cent).
Mr Field added that while it can be a challenging process, overseas expansion can provide opportunities for unparalleled growth, as long as SME owners do their due diligence.
“Going global requires an understanding of the local regulatory compliance framework, from tax and custom laws to securitisation of intellectual property and asset protection, to appropriate business structuring, so as to identify and mitigate any potential risks.
“This is where the need for an established relationship with an adviser, who has an understanding of working with businesses expanding globally, comes into play,” he said.
Mr Field also offered tips for SME owners looking to expand their operations, and advice on how to avoid some common pitfalls:
• Have a business plan – perform a SWOT analysis to identify your strengths, weaknesses, opportunities and threats.
• Do your due diligence. Research the market you wish to move into and ensure you are utilising all resources available through your accounting or advisory network to understand the legal and regulatory framework.
• Have a well thought out financing structure and ensure your business has a robust financial forecast quantifying business expansion costs.
• Understand the local economic and political environment.
• Check what government grants are available. The Australian government is trying to encourage exporting and there are a number of grants available depending on the industry and market you are trying to break into. There are also a number of trade agreements in place; for instance, in the Asia-Pacific region we have the China-Australia Free Trade Agreement and the Trans-Pacific Partnership.