Overcoming Barriers to International Expansion for SMEs through Technology
Small and medium-sized enterprises (SMEs) play a critical role in the global economy, making up over 90% of businesses worldwide1, yet they face difficult challenges when seeking to expand internationally – so much so that only around 20% of European SMEs, mostly larger ones, export to other countries2. In this article, we will discuss these challenges in greater detail and offer some solutions to help SMEs overcome them, despite their relatively limited resources.
Inconsistent volume
A common difficulty for SMEs when importing and exporting goods is inconsistent volume. Many SMEs struggle to predict and manage their volume, which can result in over or under ordering, leading to inefficiencies and waste. Additionally, inconsistent volume can also result in increased costs, as the shipper may be unable to secure a competitive rate owing to fluctuating volumes. To overcome this challenge, SMEs need to implement more accurate forecasting methods, taking into account both past sales figures and seasonal cycles within their industry.
Lack of price transparency
In view of the number and complexity of the variable surcharges which may be applied on top of basic ocean freight charges – for fuel, documentation, terminal handling and more – SMEs often find it difficult to obtain an accurate picture of the costs involved in shipping goods overseas. This can result in unexpected expenses and budget overruns. To address this issue, SMEs need to have better access to information and resources. Partnering with reliable shipping partners, with applicable surcharges clearly laid out, can help SMEs get a more accurate understanding of the costs involved.
Slow response times when obtaining information
Customers increasingly demand real-time answers to their enquiries3, and 79% of SMEs cite the provision of relevant and timely information on shipments as a key consideration in selecting a logistics vendor4, making this issue particularly important for their international business. Yet despite these concerns, traditional communication channels like phone calls and emails, typically with a lack of real-time information, often results in sluggish responses to customer enquiries, leading to costly delays and dissatisfied customers. This can be a major challenge, as SMEs need to stay competitive by responding quickly to meet the rising expectations of customers.
To elevate their customers’ experience, SMEs need to work with shipping companies and freight forwarders that are able to respond quickly and efficiently to their needs. Fortunately, new digital tools and technologies available 24/7, such as digital shipping platforms, are levelling the playing field, making it easier for shipping companies to offer smaller players a similar level of service to that traditionally enjoyed by their larger clients. For SMEs, this is helping to streamline the shipping process and improve response times.
Lack of knowledge and experience regarding documentation and regulations
SMEs often struggle with a lack of knowledge and experience regarding the documentation and regulations involved in importing and exporting goods – which are constantly changing, and often vary between countries. This can result in costly mistakes, such as incorrect documentation and noncompliance with regulations, leading to delays and fines. To overcome this challenge, SMEs need to have access to the right resources and information, such as guides and expert support, to help them navigate the complexities of compliance and understand the documentation and regulations involved.
Digital solutions are helping SMEs face their challenges
As we have seen, importing and exporting goods presents significant challenges for SMEs. As will be observed, these barriers are much easier to overcome if the SME has access to the right knowledge and expertise; however, in-house expertise in these areas can be expensive and difficult to acquire. This necessitates forming links with reliable and experienced supply chain partners.
With digital solutions such as FreightSmart, SMEs can overcome many of these difficulties. FreightSmart offers clear and transparent pricing, timely quotations, shipment tracking, and assistance with customs and documentation requirements. For SMEs with variable shipment volumes, FreightSmart’s E-Spot option offers dynamic spot pricing to meet their needs. In such ways, FreightSmart enables SMEs to grow their businesses and take advantage of the opportunities presented by the global economy.
1 https://www.worldbank.org/en/topic/smefinance
2 https://www.oecd.org/cfe/smes/31919590.pdf
3 https://smallbiztrends.com/2018/07/real-time-response-to-customers.html
4 https://www.phase-5.com/insights/top-logistics-challenges-cited-by-small-businesses-in-2021-phase-5