If you ask founders in the UK where they see opportunity in terms of growth, it’s likely that a significant number will say that entering the US market is a key milestone. Making this move provides a game-changing opportunity for growth – but it isn’t always easy. Expanding to the US comes with a lot of barriers just the intense competition and complex compliance laws that you must get your head around are enough to put many people off. So how do you know if it’s the right choice for your business?
We recently spoke to a number of our portfolio CEOs and NEDs to ask them this very same question. With their insights and our own experience, we have tried to break down why you should consider expanding your business to the US, different US market benefits, as well as when you may want to delay this move.
Reasons you should consider expanding to the US:
The US has a considerable market size
With a GDP of over $27 trillion and growing, the US boasts the largest economy in the world. Americans have significant spending power due to a higher standard of living compared to many other parts of the world, making the US a fertile ground for business growth. Additionally, proximity to Canada and Mexico offers valuable regional markets to tap into.
There’s a large investor presence
The US is home to some of the world’s most prolific investors, with over 60% of Americans investing in the stock market. This investor presence makes the US a lucrative market to enter, offering significant opportunities for funding and growth.
You may have advantages specific to your industry
Depending on your industry, the US may offer specific advantages. For example, the US is the largest worldwide market for medical products and services. Conducting thorough research into which markets your industry thrives in can provide crucial insights before committing to expand your business to the US.
The culture of innovation in the US
Another US market benefit is its culture of innovation. Exposing your team to this environment can help your business develop unique service and product offerings, staying ahead of competitors.
The US offers greater deal velocity
Deal velocity refers to the speed at which a sales opportunity moves from the initial lead stage to the final close. The sheer size and entrepreneurial culture of the US market foster a high deal velocity, enabling faster scaling and more opportunities to close deals, thereby accelerating business growth.
Networking opportunities
Entering the US market opens doors to strategic partnerships, collaborations and global networking, helping you attract new customers and investors. The US business culture places high value on networking, making it easier to establish valuable connections and quickly grow a network of professionals for support.
Your management team is hungry to grow
A driven management team is crucial when expanding to the US market. Leaders who are eager for growth and new challenges significantly boost the chances of successfully establishing a foothold in the US. Proactive market research, continuous networking, and adaptability to the American business market are essential.
Access to a diverse talent pool
The US offers a diverse and highly skilled workforce across various industries, but this must be caveated by the fact that there is a talent shortage, particularly for tech startups. Major cities like San Francisco, New York and Boston are hubs for talent in technology, finance and healthcare. Access to this talent pool can drive innovation and enhance your company’s capabilities.
Advanced infrastructure and logistics
The US has one of the most advanced infrastructures in the world, with a comprehensive network of roads, railways and airports. This robust infrastructure supports efficient logistics and supply chain management, crucial for businesses aiming for rapid expansion and distribution.
Strong intellectual property protections
The US has stringent intellectual property (IP) laws that can provide robust protection for your innovations. Securing patents and trademarks in the US can safeguard your products and technologies, giving you a competitive edge and protecting your investments.
Government incentives and support
Various state and federal programmes offer incentives for businesses expanding to the US. These can include tax breaks, grants and other financial support designed to encourage foreign investment and job creation. Researching these programmes can provide significant financial benefits.
When you should consider delaying expansion to the US:
Expanding to the US isn’t the best choice for every business – without sounding pessimistic there a number of big hurdles that you might have to overcome and without doubt, it’s a bit commitment oftentimes needing key senior team members being based in the US, especially in the early days.
Expanding to the US can be costly
Making a serious play in the US requires a substantial budget. Costs to consider include offices , wages that will be considerably more than what most people are paid in the UK, travel expenses (significant until a team is fully embedded), establishing a supply chain, bespoke go-to-market plans and likely substantially more marketing spend, legal and registration fees and necessary equipment. Additionally, founders need to be well versed in customer adoption, exchange rates and have a decent appreciation of future economic stability that can impact profitability.
There may not be a gap in the market
Just because it is big and highly competitive, there still might not be a gap in the market. With over 33 million small businesses you may be faced with fierce competition. Conducting thorough research, including a competitor analysis, is crucial before proceeding with expansion plans.
You have not accessed professional legal, immigration and financial advice
It really isn’t the United States of America. US regulations is diverse, complex and vary at federal, state and local levels. Obtaining the right legal, immigration and financial advice is essential. Familiarise yourself with tax and payroll regulations, immigration laws, trademarks, labour laws, data privacy laws and state-specific legislation such as the California Privacy Rights Act (CPRA).
You don’t have existing interest from US customers
Expanding to the US without existing customer interest can be risky for smaller businesses. Proving market demand through research or building a base of US customers before committing can provide a solid foundation and mitigate risks.
In the words of Bill Spruill, a successful entrepreneur and board adviser, “The best indicator for coming to the US is to already have some established customers. My rule of thumb is to have five customers in place that you already service.”
Cultural and business practice differences
There are notable differences in business practices and corporate culture between the UK and the US. Understanding and adapting to these differences is crucial for successful integration into the US market. This includes variations in communication styles, negotiation tactics and customer service expectations.
Want to learn more about US expansion?
Do you want to learn more about expanding your business to the US before taking the leap? Our US expansion eBook covers everything you need to know, from choosing your US headquarters location to adapting a go-to-market strategy.