Access to new ideas and products, better long-term prospects, and access to a wider talent pool are the top three factors pushing Australian businesses to expand overseas, according to a report.
The Global Natives report, commissioned by payments company Stripe, surveyed 9,000 founders and executives of online businesses in 15 international markets about their thoughts on international trade.
However, while one might assume that online businesses are simply born global and selling overseas from day one, the report found that just 66 percent of local businesses are selling beyond Australia.
Here Australia comes out way ahead of the US, where just 45 percent of businesses are selling overseas, but behind leaders Singapore and Hong Kong, where 88 percent of businesses are selling beyond their home market.
According to the report, while a range of digital tools are removing barriers to international expansion, new regulations and trade tariffs are presenting new issues.
In turn, 42 percent of online businesses surveyed stated that running an international business is getting harder, rather than easier.
Almost 30 percent of Australian online businesses selling internationally spend an estimated $68,000 – $139,000 per year on compliance and complex regulatory issues, while another 29 per cent spend $139,000 and $689,000, with almost half saying this amount has been increasing.
Despite the cost, the Australian businesses that are selling overseas tend to start quickly: 67 percent selling overseas entered new markets within their first year in business.
Just over 70 percent of Australian businesses selling overseas plan to further expand their international presence in the next few years, with 38 percent planning to expand “dramatically”.
The benefits of doing so can be significant.
According to global findings from over the last five years, businesses that expanded internationally during the first year of their existence grew 141 percentage points more quickly in revenue, and 15 percentage points more quickly in headcount, than businesses that were slower to reach international markets.
Mac Wang, head of Australia and New Zealand at Stripe, said, “Outdated financial and regulatory barriers are still slowing down innovation and growth for online businesses, but it’s no longer an option to make plans to expand internationally in one, two, five years.”