“Doing business in the region” sounds glorious. Until it isn’t.

The global market size is 100+ billion.

Every place on Earth can be reached within 24 hours on a plane.

Online meetings have just shrunk the globe again.

Good old times. Globalism is on the decline. With the recent geopolitical developments, the world isn’t a single market any longer. What does this do to SMEs operating out of a neutral country like Switzerland?

I’m not looking to describe the generic difficulties of doing business globally, as they are well-known. Rather, I am trying to share some less-known, real-life experiences that we have experienced in our international business activities at Yonder, a B2B SaaS company.

Local Representation

My love of tenders and procurement departments is well-known to those who read my articles regularly. Very often, international enterprise customers ask for local representation in their RFIs and RFPs.

It often isn’t as easy as putting an employee on the ground, and even putting an employee on the ground isn’t that easy. First of all, somebody has to pay that employee on the ground. During an RFP, there isn’t a guarantee yet that you will win that deal, and putting an employee on the ground in a new country is a significant upfront investment for smaller companies. Second, finding the right person in that specific country might be difficult or risky. Third, training and leading an employee at a distance sounds easier than it is.

So much for the easy part. Let’s assume the prospective customer asks for more than just an employee on the ground, for example for a local business entity or so-called “in-country value” in your proposal. Setting up a business entity is often prohibitive for SMEs, due to the involved costs and legal implications. So you’d rather try to find a local partner, or integrator, in that specific country. Building a partnership usually requires time — something you have very little of during an RFP process. So finding a partner in a new country is often more like a blind date than an arranged marriage.

Sanction Dodgers

For a company based in neutral Switzerland, doing business with most countries is relatively easy — although the current geopolitical developments don’t help, and pressure against small and neutral countries is rising for valid reasons.

Nevertheless, now and then we receive sales requests from sanctioned countries such as Syria or Iran.

Of course, we answer those requests with a straight “no”, but most of the people in sanctioned countries are more persistent than the toughest sales guy. After a straight “no”, they typically come back with shady proposals to do business through a third party in a different country. This is what we casually call “doing business in the region”.

And the answer to such proposals is still a straight “no”.

Insurance and Financial Requirements

Besides tenders and procurement departments, I am also passionately in love with any form of administration.

Unfortunately, when doing business globally, your minimum viable administration increases over doing business in your home country only.

Have you ever secured a tender bond from an Omani bank over Christmas, to be ready to hand in that RFP response on January 3rd?

How many times do you think we have negotiated cyber insurance coverage or liability extensions with prospective customers and our insurance providers simultaneously?

Contract Sign-Off

Let’s assume you’ve fought your way through RFI, RFP, tender bonds, and insurance questions, and you can finally sign the contract with your new customer. All financial and legal issues are cleared, and all contract clauses are accepted by both parties.

Nevertheless, the contract isn’t signed for weeks, although your contact at the new customer tells you it is in the signatory process. What’s going wrong?

Most probably, you are dealing with a multinational company that needs to ask many different people in many different countries for their approval.

One of our customers, a multi-national airline group, accidentally included the “contract signature approval sheet” in the contract. It carried 14 signatures from people in 5 countries.

That’s why it took them 2 months to sign the contract.

Currency Exchange Rates

Now that the contract is finally signed, all is good, right?

I wish. Besides the well-known challenges of collaborating across cultures and time zones, doing business globally carries a huge currency exchange risk.

As a small fish, you will always have to accept the currency proposed by the customer. Even if you agree to use a globally accepted currency such as EUR or USD, there are currency exchange risks when you’re based in Switzerland and have to pay the majority of your costs in CHF.

To be very specific, unfavorable currency exchange rates have wiped a handsome 6-digit sum off our income statement in each of the last three years.