Benefits of using a PEO for small businesses going global

Today’s global economy is much more complicated than it was even just a few years ago.

The rapid growth of China and other Asian countries has made it necessary for most businesses to think globally. While many companies have remained local for years, reaching out to potential markets through marketing and branding efforts has become much more difficult. 

When faced with the dilemma between reaching out to national clients and going global, business owners must first consider their target audience, preferred geography, and the kind of product or service they provide. Most local marketing efforts focus entirely on local customers within a relatively small geographical area, such as a city, region, or town.

Businesses may instead choose to go global and seek foreign investment opportunities to help them grow. This gives them access to a larger audience and the opportunity to tap into a variety of international marketing and distribution options.

In this article, we discuss the challenges and benefits for your SME to go global and give you the solution to succeed and become compliant with local laws and regulations.


Top Challenges For Small Businesses

As the economy continues to recover and small businesses continue to post record levels of growth, many entrepreneurs worry about what will happen next. 

One of the biggest challenges small businesses have is staying competitive in an increasingly volatile marketplace. 

Just like a large company, small businesses must deal with tough competition in the consumer market, while trying to remain profitable at the same time. The current economic challenge for small businesses is unique to their capacity and abilities, however, that does not make them impossible to conquer. 

What are some of the challenges small businesses are facing?

1) Work-life balance

For business owners or employees of a small business, it may be difficult to find time to spend with family or pursue other passions during a hectic business schedule. Most business owners recognize the need for a work-life balance that allows them to provide for their families. 

However, it can be difficult to establish a work-life balance that lets you actually enjoy what you’re doing. Employees of small businesses often work long hours and this often leads to a significant amount of employee burnout.

2) Fatigue factor

People leave companies for different reasons, from tiredness to frustration. In addition, as the number of people in a small company grows, so does the need for new talents and experienced people. 

Consequently, there is a huge temptation to hire the wrong people and train them for positions they’re not really suited for. This can lead to a lot of employee turnover and ultimately a decrease in productivity.

3) Lack of effective communication

Small businesses face a unique set of challenges because they operate by communicating directly with customers. A lack of clear communication channels means that senior management often doesn’t know what’s going on and can make decisions based on gut feel or rumors. In order to stay ahead of the competition, new challenges like customer satisfaction surveys or quality reviews are introduced to collect important data about the business and to help improve it.

4) Lack of digital marketing strategies

While many businesses use social media to connect with current customers and to build a loyal customer base, many choose to neglect this important platform and fail to create a substantial impact on their audience. Social media has the ability to dramatically increase customer awareness and brand loyalty if it is used in the right way. Unfortunately, many small businesses don’t even recognize this important aspect of their business needs. They continue to rely on outdated techniques such as print advertisements or television commercials, instead of tapping into the social media landscape.

5) Hiring new employees

While the economy has slowed, there’s still no end in sight, so the question is: how can you improve your capacity to hire while the economy is slowing? One answer lies in streamlining your hiring process through data-driven decision-making and hiring. Many small businesses make the mistake of hiring people who have past experience in the position you need them for or hiring people without the necessary skills or knowledge for your specific industry.

6) Compliance with local laws and regulations

This challenge is one of the tops for SMEs going global. Regulations, especially related to company formation and HR are very different in the different countries around the world. When a business owner goes abroad, most of the time, he or she will need a local workforce to help to grow the business in the country. But hiring and pay employees compliantly becomes a challenge because of the local rules that many times are difficult to understand. 

Talking about going global, we want to answer a specific question… Should your small business go global?


Benefits For Your SME To Go Global

Going global is an extremely important opportunity for many small business owners. 

Any entrepreneur could use the web to promote products and services worldwide to buyers in foreign countries. However, he or she has to first establish a network for satisfying the desires of foreign buyers, like paying appropriate exporting fees and shipping goods abroad. 

As these things can be done only by local businessmen, going global can bring in some additional advantages. For example, it can help a small business owner access the largest markets in the world.

But there are two main benefits of going global. 

One is to increase the reach of products and services beyond national borders. This can attract new customers from other countries. 

Second, going global can help you to increase profits because you will access more markets.

Moreover, by reaching out to a global customer base, you will be able to penetrate and compete with other companies with similar products and services. This is because technology and culture are becoming closer to each other.

Due to globalization, competition is tough and it can be hard to survive unless you have a global customer base. So even if there are cultural differences when dealing with international markets, they are not as big of an issue as they used to be. As technology advances and your business grow and develop worldwide, you will also be able to meet the challenges presented by cultural differences.

One of the most important aspects to consider when doing business internationally is compliance with government policies. With the spread of information technology and globalization, there are a lot of new rules and regulations that must be followed. You don’t want to risk getting penalized for your international expansion plan simply because your company failed to follow rules and regulations. 

Talking about government compliance and how explained in the previous sections, dealing with HR in another country, is one of the top challenges for small business owners.

To effectively solve these problems, businesses have two choices: open a company or using the services of a PEO.


What Does PEO Stand For?

PEO stands for “Professional Employment Organization”. A PEO is usually a company that helps small and medium businesses to outsource all HR and payroll aspects that businesses struggle to handle alone, especially when they expand into other countries.

Aspects like hiring employees, and managing onboarding processes, salary payments, benefits, and taxes are usually cause of problems for many SMEs that do not have the resources and time to manage them.

Most importantly, a PEO ensures compliance with employment laws. With a PEO, a company has a single point of contact for all its employees. An employee may bring an issue at work, which would be dealt with effectively by the PEO.

A PEO manages the entirety of the employment relationship and employer liabilities so that you can focus only on the growth of your business.


How A PEO Can Help SMEs To Succeed When Going Global

We said before that one of the top challenges for SMEs is related to HR. As we also mentioned, a PEO is a solution that allows companies to become compliant with local laws and regulations and reduce the liabilities for the businesses, especially when expanding abroad.

While the strategy of outsourcing HR is often used by larger corporations, small businesses with between five and 100 employees can benefit immensely from outsourcing their HR needs to a PEO.

But what are the benefits?

First of all, we want to mention a study from NAPEO (National Association of Professional Employer Organizations) that showed that businesses that use a PEO experienced the following benefits:

  • 7-9% faster growth
  • 50% more likely to stay in business
  • 10-14% lower employee turnover

A PEO will provide immense relief from the pressure of HR compliance and companies can have long and short-term benefits.

Below we show you some of them:

1) Avoid hiring internal staff to manage HR

Hiring an internal resource to manage HR and payroll procedures is complicated for many companies. SMEs usually do not have time or money to spend on internal staff to handle these HR situations and the major problem is the fact that the internal staff should be responsible for HR also for the country where you intend to expand, managing the compliance with local laws. This, most of the time is hard to obtain unless you use a PEO that can help you to take care of HR and payroll without the need to hire internal staff for that.

2) Better hiring and onboarding processes

Imagine for a moment expanding your business into a new country and think about hiring employees to manage your business. You will have to go through the candidate research process, interview, background check, onboarding, all things that can slow down your business expansion and that, unfortunately, cannot guarantee that you will find the right resource at the end of the process. Working with a PEO can put you in contact with local experts with years of experience in recruitment and in managing the onboarding process, helping you to find the best employees to start your business.

3) Better payroll management

Another big advantage for SMEs is the aspect related to payroll. Dealing with payroll is hard because requires a deep knowledge of the local law and regulations in the matter of taxes and benefits. PEOs employ accounting experts who have years of experience handling payroll matters. Not only does this free up business owners to focus on the growth and development of their business, but it lowers the chance of any costly errors in payroll management.

4) Better employee benefits packages

One of the ways that a PEO can help you is by providing employee benefits. There are a lot of employers who are cutting back on benefits for their employees because they are trying to save money. However, the PEO will be making sure that you are still offering your employees the same benefits that you used to offer them. They will help you find ways to lower the cost of providing these benefits and this can help you save a lot of money. This can lead to happier employees, which in turn lowers turnover and saves companies money on the cost of constant employee training.

5) No more compliance issues

One of the biggest headaches for many small business owners is figuring out how to navigate complex local and laws and regulations. By outsourcing your company’s HR needs, you allow the experts at a PEO to ensure that your business is in compliance with all relevant labor laws. This will help your business avoid any potential lawsuits down the road.


Conclusion

Going global is a big step for SMEs, but it is a step that can bring many benefits.

As we have seen, using the services of a global PEO can reduce many risks and costs that businesses have to deal with when expanding into new countries.

If you are interested to know more about our service and how we can help you with your business expansion plan, feel free to get in touch with us!

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