expand to new markets

As businesses navigate their way through the COVID-19 pandemic, many of them have had to make difficult decisions, including deferring international expansion plans.

A study from Enterprise Singapore (ESG) in February found that local businesses going overseas fell by as much as 38 per cent to 1,600 due to pandemic related travel restrictions.

This has some very real and serious implications. Because, for some startups and small and medium-sized enterprises (SMEs) in Singapore, the case for expanding overseas could not be stronger.

From attracting new customers to opening up entirely new revenue streams, cross-border expansion presents immense benefits and backtracking could compromise growth in an economic recovery.

Technology as an enabler of international expansion

We already know that SMEs that digitalised in 2020 earned more and have a better outlook for the future. According to the UOB SME Outlook 2021 Study, two in five SMEs that implemented digitalisation initiatives in 2020 had stronger revenue growth than non-adopters, with those that digitalised their entire business or multiple areas outperforming those who digitalised only one.

Tapping on digital technologies and tools is important for businesses seeking to expand into new markets during this time. The borderless nature of technology enables these SMEs to grow their brand and reach new customers without the need for a physical presence.

With consumer behaviour shifting online, SMEs can leverage this increased digital footprint by moving online without the hassle of having to register a local company, hiring a local team and other tasks that are capital-heavy and time-consuming.

Also Read: Why customer education plays an important role in Wise’s international expansion plan

Complementary partnerships with startups

Pushing forward with expansion plans at this time should be a serious consideration for long-term growth. Fortunately, SMEs don’t have to go at it alone —exploring collaborations with startups in the markets they’re seeking to enter is one great way to kickstart their expansion plans.

There are many programmes and government initiatives such as the IMDA Grow Digital programme that help SMEs connect with potential clients, suppliers and logistical support. All these are important connections to establish.

However, in addition to these collaborations, partnering with startups offer the added advantage of greater affordability, negotiation of terms and win-win situations, flexibility and adaptability, newer technologies, and efficient access to market and implementation.

It is worth noting that SMEs and startups are different, from the way they are funded to their business goals.

At The FinLab, an innovation accelerator by UOB, we believe that building a strong understanding of local markets through networking with such startups is crucial for cross-border collaborative opportunities within the Southeast Asia region.

By tapping on a solid regional network of businesses, The FinLab has played matchmaker since 2018 and facilitated over 550 matches between tech startups and SMEs through digitalisation efforts across Malaysia, Singapore and Thailand, to date.

Finding the right and suitable partner is a vital and delicate process. Start by looking at how each business can fill gaps and bring value to one another.

Startups, by nature, are more agile and efficient and can bring a fresh viewpoint that spurs innovation for SMEs. In turn, startups can tap on the established network and market expertise that SMEs bring to the partnership.

Here are some best practices businesses can follow to ensure successful partnership outcomes:

Set up for success with open lines of communication

Collaboration with overseas partners can take many forms and while there is no perfect formula for a successful alliance, the best success stories are always rooted in both parties having a mutual understanding of one another’s roles, concerns and expectations.

Lack of trust, mutual interest, and an imbalance of power are only some of the key barriers to collaboration. According to innovation leader Nesta, a mismatch in speed, coordination and cultural issues are less apparent struggles but contribute no less to failed organisational partnerships which subsequently leads to a failed expansion.

Also Read: Is it the right time to expand your business?

To overcome these challenges, start by establishing clear and open lines of communication which can streamline overly complex decision-making processes, facilitate the free exchange of ideas and foster an environment open to diverse thinking.

Ultimately, setting clear goals, understanding and meeting differing needs, and defining roles are steps organisational partners need to take to leverage their strengths and compensate for each other’s weaknesses.

Pilot smaller projects

Before getting into a more serious commitment, it is a good idea for partners to “test the waters” by piloting small projects to manage potential risks and to determine compatibility for a longer-term partnership.

Instead of launching several small pilots which would produce limited success, apply the “Goldilocks Principle” to find the sweet spot – a project small enough to mitigate risks, but substantial enough to deliver real results to make a case for full-scale rollouts.

Success stories aren’t a coincidence, but rather the result of strong collaborations done right. Building opportunities together can be hugely rewarding for both businesses financially as well because it provides opportunities to learn new ways of working.

Regional or even international expansions will become increasingly crucial to an SME success.

However, while the internationalisation process is essential for company survival and growth, business leaders cannot expect quick rewards. Patience is key and thankfully, there are many resources that SMEs can turn to for success.

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