Building a business in your home market is no easy feat. But it’s nothing compared to trying to make it big in the United States.
Business is all about risk and return. However, minimising the downside risk of new ventures, whilst ensuring your company can accrue maximum benefit.
The United States is a thriving and growing market.
It loves British goods and services. It’s also the world’s largest economy, accounting for 25% of global GDP. Furthermore, it’s the number one export market for UK companies by some considerable margin.
That is a lot of potential upside for UK businesses. However, this does not automatically make it a ‘slam dunk?, as not every company will be successful.
Expanding to America is a challenge, but it is also one that it is worth UK companies taking on. The best way to reduce business risk is to learn from the experiences of those who have gone before.
Newable helps over 10,000 smaller UK businesses export each year. That amounts to a lot of experience.
We see common themes emerge from this engagement with the front line of international trade. Yes, there are a number of pitfalls; but equally having an understanding of what these are make it easier for companies to navigate them successfully.
How hard can it be
One of the obvious attractions of the US market are the things we have in common, from language to culture. However, this apparent similarity should not lead to a belief that the US is the same as the UK.
In fact, there are lots of dissimilarities with the United States and a lot of dissimilarities within the United States itself.
Even at the level of stereotypes which does have some basis in reality – the laid back approach to business in West Coast is very different from the frenetic pace at which business operates on the East Coast.
Which coast are you looking at?
UK companies should take a moment to consider which market within the United States their operations are suited to best.
This first pitfall is closely connected to the second: some UK companies demonstrate a reluctance to be open-minded and flexible.
Many can be attracted to the bright lights, glitz, and glamour of New York, Los Angeles or Miami for example. However, in reality, these locations might not be a good fit and of course, they are super expensive markets.
This can lead to expensive mistakes. UK companies should consider what might be considered to be tier two locations. Competition may be less intense, and the legal framework might work better for you.
Start working on your strategy
Therefore, this could be a sensible strategy to test your proposition in America before going All in?. It takes an open mind to think that way.
It’s crucial that businesses don’t simply perceive The US as a single entity. There are significant differences in legal regulations that exist among the 50 states.
For example, Californian employers must pay employees at least twice a month, whilst in Wyoming there are no pay frequency laws at all, aside from a few industries.
Each State is different
Each state is starkly independent and it takes an expert to understand why respective legal, social and economic climates may or may not align to your business objectives.
UK companies may encounter different regulatory frameworks at local, state and federal levels in a way quite different to the UK.
A failure to take this into account is the third pitfall. The old saying has it that your business is only as strong as its workforce. Some might consider this to be the number one priority of all businesses.
A failure to consider the employment environment in the United States is a major potential pitfall. British businesses need a clear understanding of employment costs, which can vary significantly. That applies to employee benefits as well.
Last and not least are tax liabilities. You need to get to grips with the taxation policies that apply to your business and your geographical situation. Being chased by a taxman as a result of your naivety is not the right way to kick off your relationship with a new market.
Employ an expert to do the heavy lifting. The UK has never been renowned for its straightforward taxation landscape, but the US can be far more complex. Especially when you’ve got 50 states to consider.
Why the US summary
The US is an exciting, dynamic and potentially lucrative place to do business. It attracts some of the most innovative and successful firms from all over the world and it hasn’t built its reputation without substance. Taking the leap can be one of the best things you will ever do as a business, but making sure it isn’t a leap in the dark by working with local experts such as Avitus could be the place to start your American adventure.