International Expansion Mistakes That Can Lead To Bankruptcy


For many small to medium sized companies the future is related to expanding to an international market. The problem is that such an expansion is not at all easy to do. There are various things that have to be done in order to succeed. Unfortunately, in many cases the business managers make mistakes and they end up in the unwanted situation in which the financial strain that appeared with the expansion leads to bankruptcy. This is not what you want to do so here are some expansion mistakes you should always avoid.

Saving Money When Hiring Talent

When you expand you will need to hire brand new talent. This is a given. Unfortunately, in many situations companies tend to hire inexperienced and young workers as this is cheaper. Budget will sometimes be tight but you cannot cut corners by hiring workers that are not highly skilled. When you have a really good team you set yourself up for a higher success possibility. Talent is basically an investment. You want to pay it at the right it should be paid. Your goal is to hire a very good person that could lead that brand new market towards success.

Not Having A Specific Remote Decision Maker

Local market teams need to have the necessary authority to execute the big decisions based on current abilities and local market situations. When you micromanage you will do a lot of warm for the entire company. Strong leadership is necessary so you do want to hire a person that will be responsible for what happens instead of handling everything from the home country. Whenever that person needs to consult the upper management for everything it is a certainty that huge problems are going to appear.

Only Criticizing When Visiting

Let’s say that you run the Ana Heart US Yoga Store and you expand to a new country. When you visit you need to highlight both the positives and the negatives. If you do not do this it is a certainty that morale is going to go down. Local teams have authority but it is normal for the veteran leadership to show a presence. When that presence is properly seen, the entire company does better. When you just criticize as you visit, the power of the company will go down.

As with any business move, communication is vital. You want to set up the right times to chat every weak and you need to not waste team members’ time when this is done. Offer insight and advice instead of remaining focused on negatives.

Expanding For The Wrong Reasons

In many cases we see businesses that are simply frustrated with what is happening at the domestic level. They want to reach a global audience and they do it wrong. If something goes bad in the domestic market there is a pretty good possibility that something bad will also happen when the expansion starts. There are right reasons why you want to expand to a global audience and wrong reasons. Emerging markets are always enticing but this does not mean that the company will quickly start to generate profit. You want to see global expansion as a long term investment.