Taking on America – 5 pitfalls awaiting British businesses

Taking on America could be the best move your business ever makes; but it isn’t easy. Chris Manson CEO, Newable, identifies 5 pitfalls awaiting British businesses.

Building a business in your home market is no easy feat, but it is nothing compared to trying to make it big overseas in the United States. Business is all about risk and return of course. 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 is favourably disposed to British goods and services. It is the world’s largest economy, accounting for 25% of global GDP and it is 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. Exporter beware: expanding to America is certainly a challenge, but it is also one that it is worth UK companies taking on.

Perhaps 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 where these lie, makes it easier for companies to navigate them successfully.

Similar but not the same

One of the obvious attractions of the US market is the familiarity we have with all things American. From holidays, to Hollywood to the headlines, it is easy to think we know the place. We have so much in common across language, culture and history that companies can be seduced into diving in head first. After all, how hard can it be? This apparent similarity should not lead to a belief that the US is the same as the UK. In fact, it doesn’t take long to appreciate that, 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. 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. Whilst these cities might be perfect, UK companies should consider what might be considered to be tier two locations. Competition may be less intense, the legal framework might work for you, or grand infrastructure improvements and economic investment might beckon. 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.

Not a single entity

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 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. It is certainly true that 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. These are all fundamental considerations that need to be addressed. Too often they are not. Our good friends and business partners over at Avitus – an American co-employer and business services group with whom we launched America Made Easy – told us the story of a medical device manufacturer about to set up at a new branch in San Diego. Unfortunately for them, that just wasn’t going to work with a workforce of doctors and nurses and not those working in manufacturing. It is certainly advisable to use a locally based expert to support you in this area.

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. Again, consider teaming up with local partner like Avitus who can make this headache disappear.

Land of opportunity

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.

Josh Balster, Executive Vice President, Avitus Group, comments: There are so many important ingredients to a successful leap overseas, as Chris accurately describes. Having a strong sense of the location of your potential customers, consumers and workforce is arguably the most important of those. Frequently, we talk with clients who want to be in Manhattan, Los Angeles, or San Francisco because it’s a highly populated area, but it’s not just about population. It’s about consumer habits, labor forces, market conditions and so much more. You need to get that right from the get-go.”

Newable recently launched America Made Easy, an innovative partnership with leading American business services firm Avitus Group. The service, which has been designed to offer a flexible, turnkey solution to U.S expansion, is expected to unlock significant growth for some of the 5.7 million SMEs which form the backbone of the British economy, into the UK’s number one export market.


Find out how we can help your business expand to the USA