How can SMEs compete with large companies when going global

When it comes to international expansion, it’s easy to assume that larger companies are better equipped to succeed overseas. But while bigger businesses may have greater budgets and more experience operating across borders, smaller businesses have many advantages which should not be overlooked.

Perhaps one of the biggest barriers is confidence. According to a UK Government report, 37% of SMEs viewed international expansion as too risky, more than double the proportion of large businesses (18%).

To achieve cross-border growth SMEs need to judge where their existing strengths bring advantages, and where they might need to consider external expertise.

Understanding the financial implications of expansion

International expansion is not simply about identifying growth opportunities, and the attractiveness of an overseas market can look very different once the full costs of operating there are considered. As we explored in a recent HLB insights piece from our Global Accounting & Compliance Services leader, choosing the right market and understanding the financial, tax and regulatory implications of operating there are essential considerations. Labour costs, corporate taxes, import duties, regulatory requirements and the investment needed before generating a return can all affect whether an opportunity is commercially viable.

This is where some of the limitations of being a smaller organisation are more pronounced. SMEs typically have less capacity to absorb financial setbacks and must also account for the costs of complying to new rules and regulations in the target market, which they may have no prior experience of.

By contrast, larger businesses typically have greater capacity to bear initial costs and unexpected setbacks, larger internal teams with more experience of navigating different regulatory environments, and established infrastructure and networks to draw on when entering a new market.

This difference is reflected in export activity. WTO research found that just 11% of small firms export, compared with 20% of medium-sized firms and 36% of large firms. The WTO identifies access to finance as one factor behind this gap, with smaller businesses subject to more credit constraints and higher borrowing costs.

Equally, when it comes to risk and compliance, an SME’s considerations will look different to those of a larger counterpart, and failure to comply can have significant consequences.

SMEs may, however, benefit from support and financial incentives which are unavailable to larger competitors or offered on more favourable terms, easing their entry into new markets. For example, Australia’s Export Market Development Grants programme helps SMEs export and expand internationally, while Singapore’s EDGE Grant supports businesses with growth across borders, with more generous funding available to SMEs.

These factors mean that the financial case for entering a particular market can look very different for an SME than for a multinational corporation, depending on its circumstances such as operating structure, tax exposure and eligibility for incentives.

Agility, adaptability, fast decision making

Entering any new market can be complex and unpredictable, meaning that businesses need to be able to respond quickly as they learn more about market conditions, local customers and competitors. This means that the agility of SMEs can become a significant advantage.

Switching suppliers, responding to customer requests, launching a new product or service, adopting new technology or entering a local partnership are all situations in which SMEs can act quickly when compared to competitors operating on a grander scale.

SMEs may also have greater freedom when deciding how to structure their international operations. Larger companies often have established corporate structures to navigate when entering new markets, which can make expansion more complicated and costly. Smaller businesses, particularly those expanding internationally for the first time, may be able to design their operations around the specific requirements of a new market without having to accommodate extensive existing infrastructure.

Additionally, SMEs may have less legacy infrastructure to contend with. Recent research found that 67% of organisations with more than 1,000 employees still relied on legacy systems, compared with 59% of businesses with fewer than 100 employees.

While legacy systems are an issue for businesses of all sizes, the findings suggest that smaller businesses may have slightly more freedom to adopt new technology and processes as they grow across borders, rather than having to fit expansion around long-established systems.

Stronger customer relationships

Another potential advantage for SMEs is their ability to build strong, personal relationships with customers. The HLB Survey of Business Leaders 2026 found that customer expectations are getting higher, and that strong customer experience has become a decisive source of competitive advantage.

Here, the size of SMEs can work in their favour; being smaller can make it easier to offer a more personalised service and to listen directly to customers. This can be particularly valuable when expanding internationally, where establishing trust and credibility with new customers is an important part of building presence in the market.

Rather than trying to compete with larger businesses on scale, SMEs can differentiate themselves through the quality of the customer experience they provide. Technology can help SMEs build on these relationships, enabling them to better understand their customers, personalise their services and respond to changing needs.

HLB’s Survey of Business Leaders research found that 55% of respondents identified new technology adoption as a priority for 2026, and the same proportion planned to increase investment in customer analytics and personalisation capabilities. As HLB Global CEO Marco Donzelli explains in the report: “Investment in analytics, personalisation, and service excellence reflects a growing recognition that sustainable performance depends on understanding customers with greater precision.

Combining agility with international expertise

For SMEs, successful international expansion is about knowing where their existing strengths can give them an edge and where outside expertise is needed. Their size can be a strength if they can overcome the resource and knowledge gaps that can make expanding overseas more difficult.

This is where can make a real difference. Access to advisers who understand the new market(s) in question can help businesses assess the true costs of expansion, identify available incentives and anticipate tax and compliance obligations. Access to an international network can also provide local knowledge and connections without requiring SMEs to develop these capabilities in-house, which is more costly and time-consuming.

SMEs do not need to replicate the infrastructure of a large business to succeed overseas, but they do need to understand the implications of entering a new market and how their size will impact the opportunities available to them. By combining their agility and freedom to adapt with informed financial planning and international expertise, SMEs can turn their size into an advantage as they pursue growth in new markets.