What do Brazilian companies that opened in 2020, at the start of the pandemic, have in common? According to a study by the IBGE released late last year, 60% of them will close by December. This is the rate of companies that fail within the first five years in Brazil – and it doesn't even require a singular historical event like a pandemic for them to cease operations.
Along its journey, some of the biggest obstacles for organizations in the country have to do with the behavior of their leaders. This is something independent of chaos in healthcare, the climate, or the economy. A posture that doesn't give proper attention to planning, management, or even the pace a company needs to maintain in order to create conditions for expansion. Taking the right steps at the right time.
The Brazilian landscape, with its sudden regulatory changes, high interest rates, and excessive bureaucracy, is already complex enough to create further hurdles for entrepreneurs. To understand how more companies can build more enduring trajectories, however, I like to think about the 5 Ps of corporate survival. The first of these is planning.
However much the winds may shift and an entrepreneur needs to adjust course, starting with a well-structured plan is essential. Better to have a plan that needs altering than to navigate without a proper one, or none at all. Perhaps the idea of a Minimum Viable Product (MVP) has led some to interpret that every aspect of the business is in a testing phase, awaiting insights to improve over time.
Yes, everything is susceptible to improvement. However, not all adjustments can be left for later. Strategic decisions need to be made from the outset, or a company risks losing its relevance. There are innovation and technological transition costs, for example, which, if postponed, make operations too expensive or even render the business unviable.
The key to growth lies in balancing solid planning with what can be flexible. Between values, beliefs, and resources that a company must have from its founding – born with them – and those it can acquire over the years.
The second P is for performance. While, for some time, the availability of venture capital allowed companies to rapidly expand before generating revenue, that cycle is over. Now, it's crucial to focus on business efficiency from day one. Think about ways to demonstrate to investors that the company is capable of predictable and scalable growth. Prove that your model works, and even better, that it's profitable.
The third P relates to processes. Easy for the client to understand, simple for the team to deliver. Be wary of 100% digital solutions, as digital doesn't work alone. It's necessary to identify how decades of professional experience can interact with new technologies to accelerate results. Both are complementary.
Room P is for people. A company can't wait to grow before valuing its talent, which includes recognition, training, and fostering a strong and diverse culture. A 2024 Gartner study indicates that skills shortages are the biggest risk related to the workforce, according to 80% of the advisors interviewed. If you're not helping your people grow, other organizations are helping theirs, potentially reaping the benefits.
We still have time until December to give our businesses an even more promising destination. That's when our fifth P emerges: Ready for 2026?
