According to a study by the Lauder Institute at the University of Pennsylvania, over 60% of businesses that attempt cross-border expansion fail due to a lack of understanding of the local market and business environment[1]. The same study found that companies that invested in thorough market research and cultural awareness were nearly twice as likely to succeed in their international expansion efforts.

The ambiguity stems from a multitude of factors, including:

• Different consumer preferences, purchasing behaviors, and cultural norms can impact product-market fit and marketing strategies.

• Complex and constantly evolving regulatory frameworks, tax structures, and legal requirements vary across jurisdictions.

• Unfamiliar operational landscapes, including labor laws, supply chain dynamics, and industry-specific norms and practices.

• Linguistic and communication barriers that can hinder effective market research, networking, and stakeholder management.

Data from the U.S. Bureau of Labor Statistics highlights the stark reality: approximately 20% of new businesses fail during their first year, 50% within five years, and 66% within ten years.[2]

While these statistics encompass businesses operating domestically, the risks and challenges are amplified when expanding across borders due to the added layer of ambiguity.

To navigate this ambiguity successfully, business owners must adopt strategic approaches to gather reliable information, leverage relevant expertise, and build a deep understanding of the new market and operational environment. This not only minimizes risks but also unlocks opportunities for competitive differentiation and long-term growth.

However, there are several approaches business owners can take to find clarity and answers amidst this ambiguity:

1. Firsthand Experience This involves the business owner directly going through the process of establishing their venture in the new country, learning through trial and error. For instance, an Italian restaurant owner looking to open in the United States would need to navigate local regulations, understand the market, and hire and train staff - all through firsthand experience.

   The key advantage of this approach is the highly reliable and customized knowledge gained. However, it is often the most time-consuming and costly method, especially if mistakes occur during the learning curve.

2. Structured External Experience This approach involves seeking guidance from structured resources like consulting firms or professional training programs that specialize in helping businesses immigrate. These structured resources can leverage their expertise to provide curated information, tailored solutions, and best practices.

   For example, the Italian restaurant owner could hire a consulting firm that has helped similar businesses expand to the US. The consultants would offer structured guidance on market research, legal compliance, operational strategies, and more.

   While more expensive than other options, structured resources offer reliable, vetted information from subject matter experts and can accelerate the learning process.

3. Unstructured External Experience
   This involves tapping into unstructured sources like networking events, informal conversations with experienced entrepreneurs, or relevant industry meetups. The Italian restaurateur could attend local events, and connect with other immigrant business owners to learn from their journeys.

Unstructured sources can provide potentially faster insights compared to firsthand learning and are generally inexpensive or free. However, the reliability of information may vary, and finding truly relevant sources can be time-consuming.

The table below summarizes the key trade-offs between these three approaches across different criteria:

Ultimately, the ideal strategy may involve combining these approaches. An entrepreneur could start by gathering initial insights through unstructured networking, then engage professional consulting services for comprehensive guidance while continuing to build vital firsthand experience.

No matter which path is chosen, proactively addressing the ambiguity of establishing a new business in a new country is crucial. With the right approaches and mindset, entrepreneurs can transform ambiguity from a barrier into an opportunity to gain invaluable knowledge and a competitive edge.

[1] Lauder Institute's Program on the Study of International Business Expansion

[2] U.S. Bureau of Labor Statistics, Business Employment Dynamics