With over three hundred million consumers, fifty state governments, entrepreneurial dynamism, century old corporate giants and competition that bite, the US is an enormous, diverse and challenging market to understand.
Many UK businesses have a false sense of security when it comes to doing business in the US – often misled by our shared “English” language and familiarity of American culture from watching Hollywood movies. Several blue chip companies have retreated from the US after costly failed ventures. Their angry shareholders are no doubt still baffled as to how a “familiar developed market” became so risky.
As I take a break from UK Trade & Investment (UKTI), I look back over my last five years as their East Coast Regional Director in the US with great fondness.
During my tenure with UKTI, I’ve seen thousands of UK companies utilise our business development services every year to help understand if the American market is worth jumping into. The answer, they conclude, is almost always yes but the big question is how to do it?
I have accompanied dozens of trade delegations to the US as they search for their answer, and most recently, I went to the International Association of Amusement Parks (IAAPA) trade show, where companies attempt to sell to Disney and other theme park operators.
It was at the trade show that I was surprised to realize that Disneyland’s customers probably have some invaluable advice for our UK businesses. This may sound odd but please allow me to explain the similarities:
- Parents often take their children to Disneyland because they know they “need” to go for their children; in the business world, the US is too big a market to ignore, so is also a “must.”
- Parents “know” there will be lots to do at Disneyland; for businesses, the US has the customers and all the latest trends that will get any executive salivating at the opportunities.
- Finally, Disneyland is thought to be safe and easy entertainment for children; companies see the US as low risk because they will not have to worry about Intellectual Property (IP) being stolen, customers refusing to pay, or unstable governance.
So what advice can parents who conquered Disneyland give?
- All parents undertake extensive planning so they know where they are going and why. Planning is the most important thing UK companies should do before coming to the US. Poor Disneyland homework leads to disappointed children. Poor business homework leads to wasted opportunities from seeing the wrong people or seeing the right people without the right context to discuss business.
- Parents know their child’s “limits.” For example, they won’t wait for rides they are too small for or that are too scary. Businesses should not pitch to Walmart if they lack sufficient supply capacity, and businesses should not pitch to clients or Venture Capitalists if they are not clear what their Unique Selling Point (USP) is.
- Parents know that just because their child is adorable does not mean he or she can ride any ride in the park they want. A British accent doesn’t enable queue jumping at Disneyland and it doesn’t secure business deals. Having a product with a UK heritage story can sometimes aid perceptions of a product’s quality, but it will not sell unless there is a compelling value proposition.
Besides recommending businesses do plenty of homework and know their boundaries, here are five key tips they should consider when preparing to do business in the US:
Tip 1: Leave British humility, and humor, at the departure gate. Humor doesn’t always cross the pond well, so go easy on your one liners. Don’t be humble. Boast about how much better your product is compared to others.
Tip 2: Chose a US region and learn its business lingo. The US, like the EU, has different regulations and cultural preferences in each state. Think about where customers are, who the local competitors are and the cost of servicing the region.
Tip 3: Don’t settle. Date until you find a perfect partner. Unless you plan an acquisition, you will probably need local support, be that an agent, distributor or joint venture partner. Take your time and check their record and vision for the future, in terms of exclusivity and appetite for growth.
Tip 4: Be disruptive or sell better than the rest. New products and services will be welcomed if they reduce costs or add value to buyers’ overall business. If your product is not disruptive, dislodging an incumbent supplier will be tough. “Me too” products can succeed but will require the best sales team and a deep marketing budget.
Tip 5: The Wild West wasn’t tamed on one trip. Even if you select a small region of the US, make sure you are resourced for frequent market visits to meet customers and suppliers, hire staff and adapt your business. Sufficient supplies and stamina are critical to success.
Conquering the US market isn’t easy, but it’s worth it. It has been a pleasure to see UK businesses build great partnerships here, develop products for US consumers and create jobs in the US and back home to meet demand. Part of my role was making sure UK businesses did the right thing and investigate the US market. Sometimes they decided not to until they had explored new exciting emerging markets. I am still not convinced that is the right approach. Churchill once said, “You must look at the Facts because they look at you,” and I hope UK companies will look at the fact that the US is by far our largest export market (worth about £90 billion a year, which is almost 5x our exports to China) and is the biggest and most exciting market. Cracking it will pay dividends for your business and open doors around the world. Once you have cracked it, just make sure you don’t let on that you succeeded by preparing your market entry strategy like you planned your last trip to Disneyland. Sensible as it is, no one will ever believe you.