With Brexit looming large, and the political landscape in turmoil, business owners in the U.K. could be forgiven for thinking that expanding overseas right feels a little uncertain right now.
Yet it is times of uncertainty that often present the biggest opportunities, and for entrepreneurs who are committed to growing beyond their domestic shores, they could do worse than look to the U.S., as many have already discovered.
Radical Tea Towel was founded in the U.K. by husband and wife team Tim and Bea Pearce and launched as a side project to their full time jobs eight years ago. As the name suggests, the online business creates and sells a range of radical merchandise.
In 2016, with their son Luke also on board, they started exploring the idea of setting up a dedicated U.S. division, with warehousing and a distributor, and a U.S. website, which they opened in Reading Pennsylvania in 2018.
“In 2016 we were getting some sales via our U.K. site from American customers, even though none of our marketing efforts were directed at the U.S.” says Luke. “However, they had to pay huge shipping costs and wait two weeks to receive their order. We knew that selling from within the U.S. could reduce their pain points.”
The opportunity looked even brighter due to the fact that many of their designs are inspired by movements and history of mutual interest to both the U.K. and U.S. Taking advice from Business Wales, an organization set up by the Welsh government to support small businesses, they set out to establish their trans-Atlantic division.
It was a steep learning curve. They realized that until they had their products over there and were actually growing sales to real customers, they shouldn’t focus too heavily on admin, but rather on duplicating the main processes that had delivered success in their home market.
They also faced the challenge of getting products shipped over quickly from the U.K. manufacturer to respond to U.S. customer demand, due to a lengthy shipping and customs process involving a considerable amount of time and paperwork.
But it has paid off. Last year U.S. sales represented around 20% of total sales. This year the figure will exceed 50%.
The business employs eight people, four of them full time. In the U.S. they contract a warehouse to store and fulfill orders and have plans to expand and employ in the U.S.
Luke’s advice to other British business owners eyeing opportunities across the pond is to do undertake thorough research, but also to be fearless.
He says: “There are accountants, lawyers, and cultural consultants who try to make exporting look harder than it actually is. If you’re procrastinating about it through fears of accounting and legal complications, or worrying about cultural differences, that’s a terrible thing and the fearmongers have won.”
British fintech business Divido has also enjoyed success in the US, opening an office in New York last year. The company first started licensing its end-to-end point of sale finance platform to retailers and lenders in 2015. With the first 1,000 clients onboard in Europe, its focus turned to the U.S. market.
As CEO Christer Holloman explains, the market in the U.S. is complex, with each state having its own rules and regulations. The key for Divido lay in its network of trusted partners with an in depth knowledge of the market.
He says: “We were fortunate in having both Mastercard and American Express as investors. Between them, they know everything about the consumer finance industry in the U.S. and were instrumental in getting us up to speed and introducing to lenders and retailers.”
The company has worked hard to ensure that its growing U.S. team felt part of the company in spite of being several thousands of miles away from its London HQ.
“We’ve achieved this by visit each other often, running company events in the afternoon so everyone can join video hangouts, and we also running cross-border virtual projects to encourage more daily interactions,” says Holloman.
His advice to other fintech entrepreneurs looking to enter the U.S. market is to develop local strategic partners that can help open doors and hire people who have successfully launched a new software business in the U.S. before.
Nevertheless, while Britain and the U.S. may look similar at first glance, there are some cultural differences to be aware of.
Simon Paine, cofounder and CEO of the PopUp Business School, which helps people start their own businesses through a series of events and training courses, which it has started running in the U.S.
“We couldn’t understand why people had a pained expression on their face when we shared our U.S. expansion plans,” he says. “However we soon learned that what works brilliantly in the U.K. market doesn’t necessarily work in the same way in the U.S.”
While the two nations speak the same language, he found the culture very different, much more commercial and very direct. “In some ways, it makes it easier, because financial negotiation happens earlier in the conversation,” he says.
To overcome the cultural barriers his advice to British business owners is to ‘road test’ product names in case their brilliant brand idea that Brits understand has an unfortunate double meaning in U.S. slang.
“Don’t underestimate the brand equity in the British accent, especially in areas with a smaller number of regular British travellers,” adds Paine. “Someone in Colorado told me that Americans automatically think British people are clever because of how we sound, so what we say has more gravitas.”
If you are planning to expand your business to the U.S., here are the essentials:
- Carry out extensive research of the U.S. market you are targeting.
- Make contact with government and trade organizations that can provide practical help and support to small firms for overseas business expansion.
- Look for local partners and agents who can help streamline the set up processes.
- Optimize your company website and marketing materials for a U.S. audience.
- Develop a recruitment strategy.
- Make sure you have business insurance that will cover you in the U.S.