The US is a big country – the third largest by population and fourth by land mass. From Hawaii in the west to Boston in the east, it has six different time zones and over 320m people. Dealing with this kind of scale requires some careful planing, if you don’t want to be spat back out and have to return back across the Atlantic with your tail between your legs.
As part of a recent trip to New York, where Real Business was granted exclusive access to a UKTI/Norwegian Air trade mission and the journey of ten British SMEs, there was also the opportunity to sit down with Cook, the man responsible for the government’s trade and investment initiatives in the US.
Read about our journey to the US:
- UKTI New York trade mission diary: Day 1 – Travelling across the Atlantic
- UKTI New York trade mission diary: Day 2 – Finding out the motivation behind trade shows
- UKTI New York trade mission diary: Day 3 – Getting the lowdown on finance and logistics
Last year UKTI worked with roughly 4,000 UK companies which were either coming over to the US for the first time, or had a presence there already. The body is present in nine cities in the US and has the job of helping British companies understand what the opportunities are, as well as the differences between the UK and US markets.
Cook began by explaining that one of the big risks is that business owners feel a sense of familiarity when they see the US on TV and then walk down the high street – where the same global brands are evident. However, the culture of business is “quite different”, he warned.
One of the things Cook likes to do when he first sits down with companies examining the US as a market is to put up a slide comparing the size of each US state’s economy to a comparable one elsewhere in the world. The argument is that you wouldn’t tackle 50 different countries at once, so why think you can tackle all 50 states at once.
Looking at the top end of the scale, California has a similar GDP to the entire of Italy. Texas could be likened to Russia, while New York lines up nicely alongside Australia. He finds this kind of visual comparison helps business owners realise the need to decide what specific part of the US market they are after.
“For me it is about understanding the opportunity,” he said. “What we do see, rather frustratingly, is companies coming over and believing they will make a big sale. After they find it too tough, they go away and don’t come back – so it’s an awful waste of time.”
When asked about whether air travel is serving as a barrier to new British companies entering the US market, Cook commented: “We do get moans about airfares, especially in the summer. People are concerned that the cost is shooting up. If you have a Saturday night stay and flying in summer, that can be $4,000 – which is a lot for anyone.
“The big issue is around direct flights. The more of those we have, the more connectivity we have, the more opportunities for joint business there will be. This will encourage SME businesses to come here more often.
“It is a big component of coming here. Think about how you can use your time wisely. If you are able to prepare your plans early, it’s then possible to leverage off that lower cost airfare to then do something like take clients out for dinner.”
However, as Real Business found out through our interview with Norwegian Air, an increasing number of direct and affordable flights to major hubs such as New York, Boston and San Francisco are appearing.
Fail to prepare…
Having been in that space and opened and sold into new countries, Cook suggests getting an understanding of the market – things like pricing, packaging and various rules. It’s more about the little steps that get you to your desired point, rather than one giant jump, he added.
This touched on one of the main learnings Real Business came away with during our trip to New York – the need to think about the little things. Cook summarised it well when he said: “If you were in the UK and had a US supplier, think of how you’d want to deal with them. You’d want to pay them in pounds, so it’s not surprising US companies want to deal in dollars.
“So the expectation will be for you to have a bank account and platform from which to build. That doesn’t have to be an office, but could be a partner or agent. It’s about de-risking and easing worries. The easier you make it for someone to buy, the likelier they will.”
Cook believes US companies like doing business with UK business owners because of an honest, straightforward and creative perception – but Britain as a whole needs to do a better job of telling that. “Some still see us as just the UK they see in tourist trips. That will get you in the door, but it won’t keep you there. You need the right product and sales pitch, knowing how to deliver it.”
He made an interesting analogy about the difference Brits and Americans start a meeting. While we will be very polite up front, discussing the weather and sport for a good 5-10 minutes, in New York that is unlikely to happen. In the first 2-3 minutes they expect to hear about your KPIs and how they’ll earn money. “Understand the culture difference between coming here,” he advised. “Often small talk will come later in the meeting when they figure out exchange of value and then invest some time in getting to know you.”
The US director is hopeful that programmes such as the Transatlantic Trade and Investment Partnership (TTIP) will bolster trade between both the US and UK – and the rest of Europe. Yet to be ratified, TTIP has the potential to boost the size of the EU economy by £85bn, according to the European Commission.
One of the key areas Cook sees it being helpful in is duties. While they are, on average, relative low, he said, there are spikes in areas such as fabrics and garments. “Two years ago a lovely company from Devon was over here selling ballet leotards, but duties were about 30 per cent on them. Other things like pottery going into hotels, there are big spikes in that area.”
There are also issues around things like labelling, with factors such as minimum font size not so much of a problem in the UK. “Big companies have the capacity and people to manage those costs, but for small companies it is really tough. How do you get someone to investigate those barriers – you don’t want to get there and then find out your label is too small,” he warned. However, if TTIP is ratified then it should go a long way towards providing not only industry standards, but readily accessible advice and guidance on compliance.
Help is out there
Before companies even think about coming over to the US, even if just on a fact finding mission with some samples in tow, Cook advised contacting an advisor network in the UK. Becoming part of a local British Chambers of Commerce will allow a business to obtain an ATA Carnet – which effectively serves as a “passport for goods” and grants temporary admission if they are then taken back out of the country within a certain timeframe.
The support for small and medium-sized businesses looking overseas, not just to the US, is there through the government’s network of UKTI offices and the British Chambers of Commerce. Whether you look to recent success story Crabbie’s, a well-known drinks brand which has now shipped one million cases, or technology company Blippar, a venture capital-backed augmented reality offering taking off in the US, Cook wants SMEs thinking ambitiously to plan accordingly and use UKTI’s on the ground expertise to assist in any way necessary.
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