How UK businesses can cross the pond and expand abroad
For successful and ambitious UK businesses looking to expand abroad, the US arguably offers more opportunities than anywhere else. Not only are there obvious cultural and language similarities, but it's a longstanding key trading partner.
In fact, the US is the UK's top export market for goods and services, according to the Office for National Statistics, accounting for 18.9% of total UK exports in the year ending Q1 2019. In total, the United Kingdom's Foreign Direct Investment (FDI) in the United States was $505.1 billion in 2019, led by manufacturing, wholesale trade, and finance and insurance.
And according to World Bank data, the United States is placed sixth for 'Ease of Doing Business,' an assessment that considers a number of characteristics ranging from starting a business to obtaining finance. What's more, today's highly connected digital economy makes expanding into new markets and regions easier than ever.
Put all that together, and for many UK businesses, the prospect of succeeding in the world's richest and most competitive economy can be very tempting.
It's also extremely challenging, with a range of potential pitfalls waiting to upset any business plans that aren't properly thought through. There are, however, some useful starting points that can help minimise risk and ensure organisations stay on the right path:
Do your homework - understand US rules and processes
Despite many shared characteristics, there are also important variations between the two nations' business practises. Therefore, in preparing a US-focused strategy, it's critical to investigate the regulations and procedures specific to the United States. These can include anything from employment legislation, visas and tax, to payroll, compliance, and a myriad of other issues which are often entirely unknown to UK businesses.
While it may be tempting to jump right in and get revenue flowing, especially if a lucrative development opportunity presents itself, neglecting the underlying distinctions between the two countries can lead to significant difficulties down the road.
Hire local talent - add experience and credibility
The rise of remote working and the benefits of universal digital connectivity mean that, in principle, it's never been simpler to recruit new people regardless of their location. And while it is feasible to create a client base from thousands of miles away, in many cases, there remains no replacement for 'on the ground' expertise and experience.
Hiring local people may significantly improve a company's ability to establish credibility and presence in the US market and will often result in a better understanding of crucial issues such as sales practices. In addition, local employees can typically draw on more relevant contact networks and possess invaluable knowledge of how to get things done.
Build partnerships - they are an ideal way to supercharge growth
Partnerships can play a significant role in helping UK companies in their quest to break into US markets. While some businesses work with familiar partners from the beginning of their US expansion strategy, others have no partner contacts in place and need to find them. Reaching out directly to relevant US firms can pay off, but building a solid contact list and focused networking is more likely to yield greater results. Also, remember that the United States is a vast country compared to the UK, and as a result, many organisations entering markets there find it beneficial to develop regional and national partner networks.
Focus - remember what got you there
In most cases, expanding into any new market will require an investment of time and money. Ideally, business leaders will manage the financial commitments very carefully, but what can catch them out is the amount of effort they must devote to building a business in the US and whether that might mean they lose focus on their domestic markets.
This can be dangerous; entrepreneurs must never lose sight of the factors that led to their domestic success and must always strike a sensible balance between their desire to expand and the need to keep their core business healthy.
Channel your ambition - don't go too big too early
When it comes to focusing on the United States, one of the worst mistakes a business can make is to run before it can walk. While it's tempting to implement a growth plan for such a large market as quickly as possible, going too fast may be counterproductive.
Even though starting with more realistic, prudent goals may result in slower initial revenue growth, it will allow the company to acquire useful experience over time without the risk of overextending itself or running out of resources.
Don't go it alone - seek out support and advice
To increase the chance of achieving commercial success in the US, UK businesses are well-advised to seek advice and assistance before, during, and after implementing their plans.
There are a variety of organisations and resources that can help avoid the various operational, compliance, and legal mistakes that are all too easy to fall into. There are also numerous options out there focused on growth strategies and financial support.
Useful starting points include The Department for International Trade, The US Embassy and Consulates in the United Kingdom and British American Business, among many others. In addition, industry-specific trade associations can also offer valuable guidance.
Expanding – and succeeding – in the US is one of the most exciting and challenging experiences most UK-based businesses can undertake. While there may be pressure to act quickly, putting solid foundations in place is key to delivering long-term, sustainable success.
