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New research* by CIL Management Consultants conducted amongst 100 high performing mid-sized businesses with sector-leading levels of growth and profitability, shows that one third (33.5%) are actively focusing on US expansion as part of their post-Brexit growth strategy.

 

The US is the biggest individual country when it comes to importing UK goods, with a 20% share of UK exports worth £45 billion.  This is set to increase as the UK exits the EU and pursues an international trade agreement with the US. 

 

In addition to understanding the demand for specific products and services, the growth opportunities and competitive environment, the research also reveals some very important insights from businesses with US operations in terms of the specific quirks about the American market of which British companies should become fully aware.

 

Made in America / Buy American: There is a historical domestic preference to government contracts (Buy American Acts and provisions) and this often carries over into B2B and B2C preference for American products, or at least those perceived to be - a sentiment clearly echoed in Trump’s inauguration speech.  To address this purchasing preference, a British company may need to adapt the product and branding, ensure they have a mostly American workforce – especially in sales. For example, using Inc. rather than Ltd.

 

Not homogenous: A challenge facing UK companies is not only navigating the differences between the UK and US, but also internally between regions/States.   The US is made up of 50 states all with their own regulatory and tax systems, laws (employment, etc.), rules around registration and structure of corporate legal entities, education and welfare systems, transportation networks, culture and landscape/environment.

 

 

Logistics: The United States is 33 times bigger than the land area of the UK. The sheer scale of the country brings up some important logistical and supply chain questions, as well as choosing the right region to locate the business depending on existing industry networks and where customers are based.

 

Business structure. Businesses need to consider whether they use distribution partners or sales representatives to cover multiple regions, or set up a local presence in multiple places. What impact will this have on end price (industry variant, what terms and services will distribution partners demand, i.e. exclusivity, etc.)? Supply chain regulations can vary by state, adding another layer of complexity.

 

Getting a foothold. Going in solo and building from scratch is very difficult (due in part to the Made in America hurdle). Options for entry: enter with a current or supply chain partner which can introduce potential customers, establish a JV, or make an acquisition.   Regardless of entry method, lead times to first sales can be long. Pre-entrance networking and fact finding are vital. To help start building up the brand, it is recommended businesses consider attending conferences and trade shows and sign up to industry associations.

 

People and culture: Differences in language, culture and attitudes towards work can create recruitment difficulties for British companies entering the US. Experienced help on the ground is recommended. 

 

Commenting on the research, Jon Whiteman, Partner and head of the industrial practice at CIL Management Consultants, said: “It is clear that the UK Government has the US in its sights as a key trading partner when article 50 is triggered and this is underlined by Prime Minister May’s meeting with President Trump this week.  The US is certainly a land of opportunity for those businesses which invest the time to understand both the market and the culture.”