Taking on America: the trials and tribulations for SMEs
Chris Manson was recently interviewed by Business Chief USA about the challenges UK SMEs face when exporting to the USA.

America. The land of opportunity, where “the streets are paved with gold” if the old adage is to be believed. 

The U.S is the world’s largest economy, accounting for 25% of global GDP and it is the number one export market for UK companies by a significant margin – so it’s no surprise that for many burgeoning businesses, this is the place to be.

However, if building a business in your home market is a challenge – it is nothing compared to trying to make it big overseas in the United States. Yet for those who succeed – it brings with it huge opportunity, indeed recent ONS figures reveal that many are already doing it; in the year ending June 2019, exports of goods and services to the USA increased by 9.3% from £115.7 billion in the 12 months prior, to £126.4 billion – a promising show as trade talks continue.

However, this does not automatically make it a ‘golden ticket’ as the reality is, many companies will fail as they lack the insight and expertise required to succeed. Exporter beware: expanding to America is certainly a challenge, but it is also one that is worth UK companies taking on.

This is why Newable has launched America Made Easy – an initiative with our good friends and business partners over at Avitus – an American co-employer and business services group. Through this, we aim to help businesses ‘land and expand’ in the United States, minimising the hassle and the risk.  So what are some of the pitfalls to look out for?

One of the obvious attractions of the U.S 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 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.

Meanwhile, some businesses make the mistake of perceiving the U.S as a single entity. There are vast 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 know-how to understand why respective legal, social and economic climates may or may not align with your business objectives. UK companies may encounter different regulatory frameworks at local, state and federal levels in a way quite different to the UK.

When it comes to choosing a location – 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 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.

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 business partners over at Avitus told us the story of a medical device manufacturer about to be 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.

Finally – 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 U.S 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.

As with all new business ventures, with opportunity comes risk. A reluctance to appreciate and prepare for the challenges that lie ahead will come back to bite even the most talented of entrepreneurs. But if done properly, with the knowledge and know-how of how to tackle them head on, great opportunity beckons. When it comes to dynamic, exciting and rewarding places to do business, the US is about as good as it gets.

If you’re thinking about setting up in the US, and want to test your product or service in a hassle free, low risk way, our America Made Easy product may be right for you.

For more details, please visit www.newable.co.uk/AmericaMadeEasy or email us at AmericaMadeEasy@newable.co.uk