Entrepreneurs hoping to hit the big time in the States can’t expect
success at home to do the talking. Growing Business spoke to companies that have learnt how to prove themselves on a larger stage.
When Susanna Simpson realised that 25% of the clients for her PR company, Limelight, had offices in New York, she knew she would need a presence there. While the US is the UK’s biggest trading partner, a status that
won’t change any time soon, you can’t just waltz in and tell them that you’re after a percentage of the money they already spend on products like yours.
“I built up in London with a big network, good clients and a personal reputation,” says Simpson. “Starting from scratch in New York, where I knew no one and no one knew me, would have been insane, so I decided to form an alliance with an established agency there.”
If Simpson hadn’t teamed up with someone she already knew (through a mutual client), she would have risked the reputation of her brand. “I now have access to a team of people who know New York and the US very well,” she says.
Ashley Ward, chairman of the European Leadership Programme, agrees. “I have succeeded best where I found a good US national who has a Rolodex, knows his way around, and understands how hard
to push,” he says.
Ward’s organisation offers entrepreneurs a module called ‘Speak Fluent American!’ “The name’s a bit tongue in cheek, but what it means is you have to prove your commitment if you want to be taken seriously there,” he explains. “That might just mean a serviced office and a US phone number where people can connect to you. Americans don’t like dialling 011.”
Also, although Americans are generally among the most polite folk in the world, they are ‘now’ people and will respect you for being forceful.
Ways to go
Scott James, an American lawyer at Faegre & Benson’s London office, tells the UK companies he advises that they have three choices: temporal, third party and incorporation in the USA. There are variations and permutations, but you need to decide early on which will work for you.
The temporal way is to fly over, meet people, sell them stuff and then fly back. It may make you feel like a big shot, but it’s expensive and won’t build a solid customer base – US purchasers like their suppliers to be located in their country. You really need someone on the ground, in your customers’ time zone. One way is to appoint an agent or a distributor, but make sure you know all about them before you go ahead – due diligence can be difficult if they are not publicly listed. Alternatively, you could form a strategic alliance, or even set up a joint venture with an established partner with pre-existing contacts for longer term access to the US market.
Whichever route you choose, check your legal obligations. “People plan to make sales and forget about the interest these will attract from US federal and state tax authorities, not to mention HM Revenue & Customs,” says James. “It can affect your whole project – a good attorney should be able to avoid double taxation.”
Employment law
At some point you will want to set up your own subsidiary, incorporated in the USA, and actually get the guys with the Rolodexes onto your payroll. There lies true commitment, but whether parachuting in your own people or hiring locals, beware of US Immigration and Customs Enforcement (ICE). Since 2007, according to James, ICE has escalated its efforts to curtail illegal employment aggressively. Now it targets more small and medium-sized employers, such as restaurants, construction companies and manufacturing plants.
US
employees have notoriously few rights and benefits, although there are tight federal rules against discrimination. But the authorities are nowhere near as inefficient and laissez faire as they are in the UK when it comes to foreign workers, and that includes managers. The visa waiver programme only lasts three months. “Getting a proper work visa may take time,” says James. “Employers need to be proactive and make immigration compliance a high priority – preferably before ICE knocks on the door.”