The international marketplace is thriving. Australian companies are increasingly tapping into the opportunities cross-border activity in real-time global markets represent. Yet going global is no easy task. While it can be an exciting time, it can also be daunting with challenges your business has not faced domestically, like understanding unique cultural differences between regions, and managing exposure and fluctuations in foreign currencies when making or receiving international payments.
Even the most cutting edge of companies have failed in global markets, so international expansion requires careful planning and ensuring you have the right partners to support your expansion. Here are some important things to consider before exploring new horizons.
Are your business, staff and systems prepared for the change and potential increase in sales and enquiries entering a new market could bring? You might consider forging an overseas partnership or hiring people on the ground in your new target market. This will help support your customers, local partners and network as well as managing distribution and logistics. Another option is to invest in local service providers so customer service requirements can be met in real time.
You will also need to establish the right financial infrastructure, investigate supply chain logistics, get to know your legal, regulatory and operational risk and update your marketing collateral to prepare for the expansion.
Familiarising yourself with the etiquette and business customs of the region you are planning to operate in is key to gaining new customers or forging successful partnerships. Countries can differ in their approach to communication, hierarchies, dress and even timekeeping.
As an example, Germans are well-known for their punctuality, while in many African and South American countries, scheduled appointments are often treated like a general guideline rather than something to be strictly adhered to. So before travelling to a new country, be sure to do your homework first.
Currency markets can be volatile. At the end of January, for example, the Australian dollar ended a seven-week run against the US dollar which saw it reach its highest level since 2015. For exporters, a strong local currency reduces price competitiveness in overseas markets, which can impact company profits.
Many businesses operating in international markets opt to use a hedging strategy, a way to minimise or eliminate foreign currency exposure. However, setting up the right hedging strategy takes skill, so seek advice from an expert before undertaking such a strategy.
Managing international payments is complicated and risky. Ensuring payments are made in a timely way can be a major challenge and any unnecessary manual processes can impact customer service levels and your business’ bottom line.
The good news is that today there are cutting-edge digital and integrated solutions your business can utilise to make payments a simple and efficient process, without a huge investment in separate infrastructure. Tailored integration is key, especially when you are dealing with hundreds or thousands of payments.
When your business is undergoing significant change, it can be easy to lose sight of your long-term goals. Overseas expansion plans can be derailed by failing to set clear objectives for growth, and sticking to them.
As a business owner, it can be hard to relinquish control of every aspect of your company. However, as you expand, selecting expert partners to support your growth is crucial, freeing you up to focus on the things that really matter – like successfully growing your business.
Darren Cook, Head of Integrated Partnerships & Payment Solutions, AFEX