Recent research from the University of Limerick, Mauve Group, and the All-Ireland Business Foundation’s report Navigating global markets shows that while SME exports grew by 16.8% between 2020 and 2022, significant barriers remain in place, resulting in hesitancy to undertake expansion projects. The study highlights three key challenges as the main factors hindering a broader move towards international expansion.

Lack of local knowledge in new markets

One of the biggest stumbling blocks reported by SMEs when considering expanding globally is navigating unfamiliar business environments. Moving into a new market means grappling with regulatory complexity, cultural differences, and country-specific tax and HR rules. Without proper knowledge, companies can expose themselves to legal and financial risks.

For example, in the United States, there is no single federal payroll system. Each state, and even in some cases, individual cities, enforce location-specific tax regulations and reporting obligations, which can potentially cause multiple instant compliance challenges for a European SME that is accustomed to a centralised national system. 

There are practical solutions available to overcome these obstacles. Partnering with local experts and using Employer of Record (EOR) services can help businesses mitigate compliance risk and enter new markets smoothly. These approaches give SMEs access to specialist knowledge and allow them to test the waters before committing to larger, long-term investments.

Time-pressed teams

Another critical barrier is a lack of time. Nearly three-quarters of Irish companies reported that limited capacity was their biggest concern when considering overseas growth. SME leaders often oversee all facets of their business, including operations, finance, HR, and sales, simultaneously. Adding the complex undertaking of international expansion to this list can be overwhelming.

This reality highlights the need for smart delegation and external support. Outsourcing administrative burdens such as payroll, compliance, and HR can free up leadership teams to focus on strategy. Hiring locally in new markets brings immediate expertise, reducing the learning curve and minimising risks. SMEs should also implement scalable HR and finance processes to avoid bottlenecks as they grow. By leveraging external advisors and building strong support networks, business leaders can carve out the time they need to ensure successful expansion.

Limited working capital

Even when SMEs have the ambition and expertise to grow internationally, financial constraints can hold them back. Many businesses feel they lack the resources to take the leap. The upfront costs of setting up abroad, including market research, staffing, compliance, and infrastructure, can at best be daunting, and at worst render the project unfeasible.

However, there are solutions to help organisations overcome these barriers. State support schemes such as Local Enterprise Offices offer grants and guidance for businesses at different stages of their export journey. Strategic partnerships, such as those with Employer of Record providers, can also ease the burden, allowing SMEs to share resources, enter new markets alongside trusted allies and test the market without having to invest in entity set up. Finally, phased expansion strategies, like testing a single product line in one new market before scaling up, allow businesses to spread costs over time and manage risk more effectively.

Unlocking global potential

The findings from the Navigating global markets report underline that while internationalisation is challenging, it is far from impossible. Irish SMEs are already proving that growth abroad is achievable, with exports steadily rising in recent years. By demystifying cross-border regulations, outsourcing difficult, time-intensive tasks, and tapping into available financial supports, even the most time-pressed teams can begin their international journey.

With the right strategy, SMEs can unlock their global potential and thrive long-term in overseas markets.

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