How To Avoid The Most Common Pitfalls of U.S. Expansion

Whether your business is VC-backed or self-funded, founder-CEOs around the world view America as an accessible land of opportunity. Over 300 million consumers and an $18 trillion dollar economy; who wouldn't want to break into this market? 

In my experience, founders think they broadly understand the American market, then quickly and expensively learn that they underestimated almost every part of the expansion.

First are the cultural and language assumptions that trip up ambitious founders. Having an accent may give you an extra few seconds at the start of your first interaction but after that, it's down to the value you present. It certainly does not overcome the fact that unless your offer is truly unique or high value then a version of your business is already here, and your competition likely has both bigger budgets and more market experience than you do.

The second is that it's a good idea to make a trip to the U.S. and work it out with your team on the ground, assuming that deals will be easy to find because there is so much opportunity, only to waste months without gaining traction. This lesson is a tough one, which is easily avoided by preparing better and ensuring you have a lead generation strategy in place before making the investment in an exploratory trip.

The third is that it's ok to arrive without a strategy for servicing U.S clients in their own timezone and to the standards they expect. Without a local presence and some raving fan U.S. clients in the same sector or region, International companies will struggle to build meaningful revenue. There is no substitute for a book of U.S. clients and a local team.

This sounds like a chicken and egg scenario. Here are a couple of common strategies:

Send your best salesperson

This is the most common strategy we see, and the most common flaw is that the business sends a deal closer to a new market. The flaw is that this requires they change roles and become a door opener, also working without appropriate marketing resources or founder support.

A rep who has previously been used to the home market where they enjoy a prospect’s familiarity with the brand, leads being generated for them, a team to bounce ideas off and compete with internally is suddenly out on a limb, in the noisiest and most competitive market on the planet, using foreign case studies. Not ideal. Remember that simultaneously this strategy takes the best closer away from the home market, potentially affecting revenue. You can see how this can be a recipe for failure.

One way to start this strategy is for the rep to arrive along with the founder with a full calendar of introductory meetings already booked. Focus on a vertical in which they can demonstrate they excel in their home market. From here they can assess the opportunity and the founder can make any required decisions on contract flexibility or execution and fulfillment strategy to get deals done.

Recruit in-country

Instead of sending over a top salesperson and learning slowly, why not recruit in-country?

Recruiting a senior in-country role can be very valuable very early in the process to work alongside you, the founder to learn the ropes directly from you. If you are prepared to pay more than you normally would for a similar role in the UK or Europe, you can realize the investment of adapting your company to do business sustainably in America much more quickly.

However, it’s worth noting that the price difference between an exported leader and a local market hire is significant, and a combination of cash burn and lack of trust most often sways the decision towards migrating talent from the home market, which can cause huge delays in adjusting to the new market.

If starting with a local hire, the founder also needs to commit significant time to living in the states, ensuring the new hire and team is supported while also learning how U.S businesses really work. It’s important to recognize this will likely change the whole company culturally from the founder down.

What can we do?

In order to succeed in the U.S., your business has to be prepared to provide the support the expansion team need. An established sales pipeline. Marketing. Customer services. Aftercare and sales enablement. Can you ensure that warm leads coming in and a diary that is filling up with introductory appointments before they take off for JFK?

What support can you give them to ensure that American customers know they will have support tickets handled quickly? Five or more hours time difference kills response times: the market demands answers to problems and resolutions in real-time because that’s what they get from your local competitors.

Be Strategic, Lay the Groundwork

Plan carefully. Assess the lay of the land, the market, your class of competitors, and routes to market that will ensure you win introductory meetings, then learn from those and progress to qualified meetings.

You need a team with market experience to point these things out to your management team as soon as you can. As expats, you don’t know what you don’t know, and it can kill both deals and retention.

One advantage of starting by hiring local is that the team will come with a local network. It will be easier and take less time for someone familiar with the market to generate leads and win clients. Plus, they should come with an established reputation and trust factor locally. All of this would prove valuable in the early days when establishing your brand.

As with any expansion plan - be sure to check the variables with legal and tax professionals before deciding your strategy.

If you need help planning U.S. expansion contact us.