Monday, 18 june 2018 | Redacción CEU
Sometimes it is necessary to take a step back so you can take two steps forward. We are used to talking about the virtues and advantages of business internationalization, but we know that in this type of expeditions entrepreneurs also take risks. On some occasions, these immersions in new markets do not achieve the expected results or meet the expectations. It is something that most entrepreneurs avoid considering, but it is also a point that deserves reflection when someone decides to bet on an adventure of this magnitude. What happens if the project does not reach a good conclusion? When is the bet on a new territory lost? Can you leave a market abroad with your head held high? To what extent can the failure of the arrival abroad lead to the decline of the business?
It is important to understand the reasons why a project abroad might fail to stay afloat. This analysis will help us to appreciate whether it might prove profitable to try to save it by offering a different approach. It may be advisable to extend the time margins to give it a new opportunity. It might be vital to redefine the goals. Or whether time has definitely come to consider saying the final goodbye. Putting an end to an adventure like this is not a simple decision that can be taken lightly. However, when the projects have been carefully designed and planned, this resolution is much simpler to adopt. It also less likely to occur.
On the other hand, if we have erred in this point -the planning-, a withdrawal on time can become an intelligent bet. Many companies have managed to reverse a setback, a bad decision or an unfavorable situation, and turn failure into a business opportunity. Even some companies have taken advantage of some of their most famous mistakes or some of them have even turned failure into their strategy. Entrepreneurs are often wrong, the difference will be marked by their ability to learn from failures.
The importance of uncertainty management
When a company decides to launch itself into a new market there are many variables that must be taken into account to properly identify whether the project guarantees the success. Even so, some of them may be difficult to predict. This is the case, for example, of an unprecedented meteorological catastrophe or an unexpected legislative change that affects our business. However, when making the decision to land in a foreign market, it is essential to analyze the different opportunities, threats, weaknesses and strengths, carry out a detailed study of the target market and, of course, proceed with an appropriate risk-management policy.
Uncertainty is a variable which is linked to any project. Although this is an impossible equation to solve in an complete way, it is possible to reduce it to a minimum. When considering an initiative abroad, it is important to take into account the risks inherent to our sector, but also the most frequent causes of the failure of a project abroad:
- Short-term or poor strategic planning
- Inadequate financial management
- Insufficient risk planning
- The lack of awareness of the market due to an inadequate study of the field
- Forgetting the needs and particularities of the final client that do not have to match the ones from the origin country
- Setting unrealistic goals
- Problems derived from lack of communication
- Professional profiles that do not adapt to the demands of work
- The lack of leadership and involvement in the project
- Logistical problems
If these risk factors have been taken into account, it is more difficult for the presence of the company abroad to come to an end. However, when a project is not following the planned course, it is important to understand what the reasons behind the unfulfillment of expectations really are. A detailed analysis of these small triggers will help us to find out if it is possible to redirect the course or if the damage has already reached an irreversible point.