Brainfood: Crash Course in... Making it in the states

You've outgrown the domestic market, you are ready to conquer new horizons and fancy having a crack at Uncle Sam. How do you set about getting into the US market?

by Alexander Garrett
Last Updated: 09 Oct 2013

Think twice. 'If you don't already have overseas market experience, the US isn't the place to start, because the size and demands of the market are so great,' says Dick Brentnall, a director at the Institute of Export.

'There are more British failures in the US market than successes.'

Do your research. The scale, complexity and competitiveness of the US dictate that you must establish that there's a market for what you have to offer before you make your move. Says David Booth, an international trade adviser at Greater Manchester Chamber of Commerce: 'Contact your Business Link and you will be appointed an ITA, who will help you produce an action plan and commission professional research.'

Pick your route. Setting up a subsidiary US trading company isn't the only way in. You can export via an agent or a distributor; form a joint venture; find franchisees; or even acquire a company there. UK Trade & Investment has a free booklet, Establishing a Business Presence in the US. Its author, Elizabeth Monnet, says you need to look at how a market sector works before choosing. 'Frequently, overseas companies establish a US trading company to act as the co-ordinator of their other distribution channels.'

Look at a map. With 50 states to choose from - each with its own laws and tax regime - selecting a location for setting up is a challenge. Look for clusters of your industry, contact the UK offices of individual states and do trade visits. Remember, 70% of the population live on the East Coast. 'We advise SMEs to identify states where they know they can get initial wins,' says Booth.

Focus. 'It would be foolish to have a scattergun approach and fire at 50 states at once,' says Brentnall. Better to pick off the big conurbations one by one, or find a non-geographic segment to concentrate on. 'You should look at the US as 50 different countries joined by the federal system,' he adds.

Act American. 'Being British can open doors, but Americans are aggressive business people and at the end of the day you must have the right package or they won't do business with you,' says Booth. All other things being equal, US businesses and consumers would prefer dealing with their own.

It's gonna be expensive. 'The cost of entry is extraordinarily high compared with other markets,' warns Brentnall, 'not least because of the legal costs and the cost of marketing.' Incorporation costs are only the beginning: you'll need to come to terms with the immense raft of liability and employment legislation, as well as protecting your business and its intellectual capital.

Do say: 'After in-depth research, we're sure we have the product, price and positioning to gain a foothold in the US market.'

Don't say: 'You chaps really should buy British - after all, you were our colony not so long ago!'

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