All over the world, governments are turning to the export sector as a means of generating employment and repairing economies damaged by recession. Small and medium-sized enterprises (SMEs) are often the first sector to recover after a recession, but with depressed domestic economies they are being encouraged to grow their business in overseas markets.
The US Small Business Administration recently announced a $60 million program to assist small businesses in the United States to enter overseas markets. This funding can be used to localize documentation, promotional materials and websites. But what is it like to provide services for SMEs? Are they just like smaller versions of large corporations or do they present different challenges for localization service providers (LSPs)? Ireland is somewhat ahead of other countries in actively encouraging its SMEs to internationalize and may offer some useful insights into how to meet the needs of these businesses.
Some 20.7 million SMEs accounted for more than 98% of all enterprises in Europe, of which the majority, around 92%, are businesses with fewer than ten employees. SMEs are more prevalent in Ireland than in the European Union (EU) as a whole. Some 99.7% of all businesses in Ireland are SMEs and they account for 729,989 jobs or 69% of all employment in Ireland. These Irish SMEs create €43 billion worth of value-added tax, according to recent EU data. Internationalized SMEs demonstrate much higher employment and turnover growth than SMEs that are active in domestic markets only. That’s why governments love them.
However, SMEs don’t have the capital, diverse skillsets and resource pools that are available to bigger organizations that internationalize their businesses. The small business approach to marketing often appears unplanned, unorthodox or even at times chaotic from the large organization perspective. SMEs tend to be closer to their customers, are more flexible in responding to customer needs and are more agile at exploiting new opportunities than larger companies. Because of limited access to capital and resources, SMEs depend on personal networks and word of mouth to market their products and services. They very rarely engage in full-scale market research as their customers and industry contacts provide them with the information they need to develop their presence in specific markets.
SMEs face different challenges than big, well-resourced companies. While it is relatively easy to establish personal networks in the domestic market, it may be expensive and difficult for an SME to establish suitable, trustworthy relationships in overseas markets. For many, the prohibitive costs associated with launching a new product or service in an overseas market are a serious limitation. In addition, the emphasis on personal networking in SMEs means that areas such as marketing communication, branding, digital marketing and localization may be underdeveloped or not fully understood. In fact, for many SMEs, the decision to go international may be the first time they have considered these aspects of marketing in any detail.
An additional factor affecting Irish SMEs in particular is that foreign language skills are lacking and their value is not fully appreciated by management. In a recent EU Eurobarometer Report, which surveyed companies across 27 EU countries employing more than 50 employees, only 9% of Irish companies surveyed considered that foreign language skills would be essential for future graduates over the next five to ten years, compared to a 31% EU average. The only country to score lower in the survey was the United Kingdom. This is in no doubt due to the fact that 38% of Irish trade is with the United States and the United Kingdom, both English-speaking countries, while the next most important trading partner is Germany, with only 7% of trade. However, there is increasing emphasis in Ireland on trading with partners in “stable currency areas” like the eurozone. The new challenge for Irish SMEs is that stable currency areas are by and large not English speaking.
Government agencies provide vital supports to SMEs. One in ten European SMEs would not have internationalized without government support according to the recent EU Commission survey data. Enterprise Ireland is the Irish government agency responsible for the development and growth of Irish-owned enterprises in world markets. Enterprise Ireland offers a wide range of supports which includes access to its network of 31 offices in 60 markets. The agency also funds training and workshops as well as providing funding for SMEs to explore new overseas markets. The Going Global fund is designed specifically to help Irish companies with successfully established businesses in Ireland to explore opportunities internationally. The fund is designed to help businesses evaluate and assess overseas markets; develop plans to localize their current product or service for overseas markets; identify suitable channels to international markets; examine the possibility of using the internet to sell or market themselves in export markets; and conduct overseas research.
However, for SMEs, support provided by the private sector is generally much more sizable and of greater impact than the support from the public sector. For many SMEs, their firm, their accountant, their web developer and their localization agency may be the first points of contact when they decide to go global.
Some evidence from business advisors to Irish SMEs
Digino is a marketing and design company that employs a team of 13 communications, design and marketing experts. The company is based in Killaloe, Ireland, and is led by founder and managing director Ed Field. Digino specializes in international business-to-business communications and marketing. Field has spent 20 years crafting effective business, communication and marketing strategies.
Field provided some insights into challenges faced by Irish SMEs when entering international markets that support research findings, particularly regarding the unique nature of the SME approach to marketing: “SMEs tend not to have the type of senior communications expertise you find in larger corporations, nor do they usually employ the services of top tier communications and advertising companies. So frequently the growth of SMEs can be hindered by weaknesses in their communications. Companies might have great relationships with their current customers, but weak communication means they make hard work of winning new business. Entering overseas markets often forces a conversation about messaging and branding that may not otherwise have happened. Not having that conversation means that any weaknesses in the company’s messaging can be magnified with each new market that is entered.”
Field described the typical process involved in developing “world ready” marketing communications with SMEs: “Powerful communications are true and simple. When you need to target multiple markets, the simpler you can make this communication the better. As close as possible to universal communication is the goal, so that you need as little adaptation as possible.” However, Field stated that companies should “localize, translate or produce specific content for each market.”
AMAS is a Dublin-based digital strategy company founded by Aileen O’Toole, the cofounder of the Irish national newspaper The Sunday Business Post. AMAS has developed and helped execute digital strategies for over 30 Irish SMEs, the majority of which are in specialist business-to-business markets such as software, biosciences and technology. The company also works with large corporate and public sector bodies.
O’Toole agreed with Field about the skill gaps that exist in servicing export-focused SMEs and larger entities. “These projects can be highly challenging, but can also be very rewarding and achieve good results from relatively modest marketing initiatives. Typically, our SME clients are owner-managers who know their businesses and their market segments very well. They are multitaskers and have to respond quickly to economic and marketplace changes.” Often, said O’Toole, the early stages of a project are about educating the clients about broader marketing strategy. “In some cases, those conversations have been a wake-up call to the clients who realize that they need a marketing specialist in-house.”
O’Toole noted that buyers tend to be very focused at trade events about who they want to see. They do their research online before the event, identifying exhibitors and individuals through the trade show’s website, through suppliers’ websites and through groups on LinkedIn. In the case of one client, “a significant prospect targeted him before the show through a LinkedIn group. They met at the event and sometime later were given the opportunity to tender for a significant seven-figure contract which our client won. The client, initially dismissive of LinkedIn, became a huge advocate for social media and its value in the business-to-business buying cycle.”
Irish SME snapshots
Richard Keenan & Co, based in Borris, County Carlow, provides advanced animal feeding machinery and solutions. The company markets its products and services in over 25 countries. In 2012, Keenan made a decision to review all its online material in recognition of the fact that customers and prospects were referring to its websites more frequently. Rather than just reproduce brochures online, Keenan decided to take the opportunity to create a much more detailed, engaging online presentation (Figure 1). Once the first English site was produced, several country versions were rolled out. Each country manager can control content that changes frequently such as news, events, support, but the core presentation layer is maintained and controlled by the head office, ensuring global consistency of design and message.
Virtual Access in Dublin provides networking equipment and services to telecom providers. It serves a global English-speaking market and so did not produce localized versions of its website. However, matched with some highly specific search engine marketing, they are now producing a sustained flow of high-quality leads from all over the globe. The company is currently producing some “handshake pages” in several languages for the purpose of greeting prospects in their own language but explaining that the rest of the website is in English. The site and marketing campaigns are serving as a powerful business development channel for the company and have reduced their dependency on expensive trade shows.
Dubarry of Ireland is based in Ballinasloe, County Galway, and from humble origins has grown into a leading international brand for quality performance lifestyle footwear and clothing. The brand is well known and recognized in both the nautical and country lifestyle markets. Dubarry has a highly successful international marketing strategy, marketing its products through premium stores and directly to consumers at equestrian, lifestyle and other events in export markets. Recently, a new e-commerce site was launched, the first in a series of multilingual, multicountry site launches. Site specification and resource planning took account of the need to support different languages and market requirements. Social media, e-mail and search marketing form part of the digital strategy, managed in-house by a digital marketing specialist. Apart from introducing new customers to the Dubarry brand, the digital strategy has also allowed the company to build its relationships with existing customers who buy at equestrian and country life shows.
Safety Storage from the west of Ireland manufactures bespoke chemical storage solutions. It has operated successfully in the Irish market for many years and has used a website and search marketing to help drive inquiries. Due to the success of this marketing program in 2011, the company decided to expand its reach and trial some marketing initiatives in the United Kingdom. Initial results were promising so the company decided to invest in a very detailed, highly crafted UK website. As soon as the new site went live, inquiries increased rapidly despite the fact that the company has no physical presence in the United Kingdom. With this simple but highly effective strategy Safety Storage has, in just two years, grown UK sales to account for 30% of its total business.
Implications for LSPs
The different characteristics and needs of SMEs mean that LSPs should not expect them to be like smaller versions of large corporations. This has a number of implications. It should not be taken for granted that the SME has a fully developed marketing function that has produced a definitive set of strategies and content for the domestic market that can just be adapted for overseas use. The LSP may be the first point of contact an SME has made about internationalizing its business. SMEs may need advice and guidance regarding branding, marketing communications and marketing research — areas that touch upon but which are outside the core competence of many LSPs. SMEs, in fact, may not yet be at the point in their development where localization is even feasible or right for the business.
How can LSPs address the complex needs of these SMEs when much of the LSP world is geared toward servicing the high volume, back office translation needs of large organizations? A starting point is to develop relationships with government agencies that offer advice, training and funding to SMEs. If you are a first point of contact for an SME, the company may not be ready for localization. It may be best to offer the company access to personal networks you think might be of help. Ultimately, a good relationship with an SME may build future business that is of value to the LSP.
Look at the type of SMEs in your market and try to assess their needs and characteristics. SMEs may have a very low appreciation of what localization can offer. Is there any way you can package a number of localization services into a bundle in such a way that it will be meaningful to smaller business owners and at a price that addresses their limited resources? If SMEs require services that lie outside the normal range of those offered by your company such as market research or marketing communications, ask yourself if it is worth hiring the expertise or partnering with another agency that has these skills. Finally, build confidence with the client. It is often best for LSPs to start working with SMEs from a modest base, propose a limited project initially that can be used as a proof of concept and build incrementally from there.