Expanding into new countries is a real challenge for small and medium enterprises (SMEs) in the Middle East, an expert from global bank HSBC said.

HSBC Middle East regional head of commercial banking Keith Bradley said that while most SMEs could probably pinpoint their successful start to an initial focus on the domestic market, they recognised that international competitiveness was fast becoming essential to ensuring long-term survival and growth.

"Venturing overseas can be an exciting and rewarding prospect for these businesses, given the rising challenges in the domestic market such as increasingly high costs and a small market in the Middle Eastern countries," he said.

"However, venturing abroad also has its problems as businesses will have to contend not just with business challenges, such as the lack of cash flow and payment facilities, increased exposure to financial risks and finding the right talent to support the overseas expansion. They would also have to deal with the additional burden of working through the unique business climate and practices, laws and regulations, as well as social and cultural norms of the countries they seek to enter," he added.

"Small businesses need more than just cash. SMEs should look for a financier that would provide not only capital, but also support and expertise to the overseas business.

"They should look to follow the basic steps to raise finance for the expanding business - prepare a business plan, decide on how much financing is needed, review the various financing options and assess the risks," he said

Mr Bradley said legal problems can tie up critical resources for months or even years, and leave the business vulnerable, and advised firms to ensure they were abiding by tax laws and other legislation in their new territories.

"Small businesses should look to protect themselves against potential risks they face when trading overseas, which may include bad debt and losses due to disruptions such as customer insolvency, protracted payment, or payment default," he said.

"Businesses should ensure that workers are fully trained and are able to operate to a high standard, as investments in training can pay long-term dividends," he added.