Companies could face growth challenges when they attempt to expand their businesses. The risks involved might put businesses off the idea of expanding their operations. There are three major factors that reduce firms’ confidence in business expansion.
- Different markets have varying levels of competition. Severe market competition might put off companies because the chance of failure is high. Companies usually achieve better results in their local markets because they are familiar with the market environments and local institutions. However, companies might not be as confident in foreign markets especially when the competition is intense. Therefore, the high risks associated with foreign expansion might be a reason why companies are reluctant
- Lack of experience
- When a business decides to expand into a foreign market, a thorough understanding of the market is required. However, not all organizations have enough resources and expertise to gain market insights. It’s difficult for companies to enter a highly competitive market without a good understanding. Many small business owners are underprepared for the realities of fierce competition. Leading to a failure response to unexpected market changes. This increases the chance of failure and might put off companies to expand their businesses.
- Cash flow management
- Cash flow problems are a common reason why small businesses go bust. Companies would invest a great deal of money during business expansion. This also ties up cash and increases the chance of liquidity problems. Cash flow problems could quickly go out of control and leave the organization in a precarious position. These could potentially endanger the survival of the businesses which put them off.
Bubu& Friends provides tailor-made solutions for your company to help to avoid these risks and challenge when you expand your business internationally.