Entering the US survey results_V4
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The document summarizes the results of a survey of 68 international companies regarding their experiences and challenges entering the US market. Key findings include: companies who were most successful had more aggressive expectations and contingency plans; successful companies made greater use of external expertise; and establishing a US presence was seen as important to understand customers and adapt to local business norms. Most respondents felt they had no choice but to enter the large US market, and would have done things like better planning and funding with the benefit of hindsight. The document also describes new consulting services to help companies validate business models and establish interim US subsidiaries more smoothly.
Entering the US survey results_V4
- 1. 325M Sharon Park Drive Menlo Park, CA 94025 www.visionandexecution.com MODULE 3 Entering the United States (U.S.): Challenges & Victories Patrina Mack Managing Partner
- 2. © 2015 Copyright Vision & Execution Executive Summary • Companies who considered themselves successful entering the U.S. tended to have more aggressive expectations about how quickly they would be successful. Perhaps “dream big” plays a role. The more successful companies were also the ones expecting the worst, presumably with contingency plans to address the expected challenges. The successful companies also tended to use more external expertise to ensure their success, being more open to local market expertise across a number of functional areas. • As companies expand to the U.S. and make local hires they generally expect it to be relatively similar to their home country. Technical resources are expected to be easier to find but more expensive to hire. • Overwhelmingly companies said that you must eventually enter the U.S. market because it is the largest market, and key to that was creating a U.S. presence. It is much easier to adopt to U.S. business norms when you’re physically here as well as be more responsive to customers. With hindsight the most successful companies said that better planning, especially understanding customer needs, and better funding/budgeting would have made their expansion easier. 2/10/2015
- 3. © 2015 Copyright Vision & Execution Background • Q1: Please tell us a little about yourself. Please indicate which of the following that best describes you • Base: 68 The majority of respondents were part of the executive staff of companies headquartered outside of the U.S. About one third of the respondents represented agencies that support companies in their efforts to expand to the U.S.
- 4. © 2015 Copyright Vision & Execution Background • Q2: Which category best represents your citizenship? • Base: 68 The vast majority of respondents were born outside of the U.S. Among the segment that felt they had been somewhat or very successful, all of their companies originated outside the U.S. and most were holders of business visas.
- 5. © 2015 Copyright Vision & Execution Background • Q3: Next, we'd like to know about your company. How many employees work for your company worldwide? • Base: 68 The majority of respondents were from small to medium sized businesses. The majority of companies who considered themselves somewhat or very successful were still under 50 employees.
- 6. © 2015 Copyright Vision & Execution Background • Q4: Did your company originate outside of the United States? • Base: 68 Approximately 80% of the respondents worked for companies that originated outside of the U.S. or were not U.S. citizens when starting their company in the U.S.
- 7. © 2015 Copyright Vision & Execution Background • Q5: Where is your "home" country located? • Base: 56 • Respondents were largely from the west; Asian companies were under- represented in the sample. 50% of Asian companies felt they had been somewhat or very successful compared to 33% of Russian/CIS companies, 27% of European companies and 23% of Scandinavian companies. No other regions considered they had been successful.
- 8. © 2015 Copyright Vision & Execution Expansion Plans • Q6: Please tell us about your plans to expand to the U.S. Which of the following best describes your presence in the United States? • Base: 54 Over 40% have entered the U.S. market, one third of respondents have been operating in the U.S. over one year, almost one third plan to establish a U.S. presence in the next 1-2 years. Only 5% do not plan to enter the U.S. market.
- 9. © 2015 Copyright Vision & Execution Expansion Plans • Q7: Did you decide to expand or consider expanding to other regions beyond your home country before you expanded or considered expanding to the U.S.? • Base: 27 More than two-thirds of respondents did not choose the U.S. first when expanding their business.
- 10. © 2015 Copyright Vision & Execution Expansion Plans • Q8: What regions did you expand to/plan to expand to before expanding to or considering the U.S.? Check all that apply. • Base: 27 Scandinavians were somewhat more likely to expand immediately to the U.S. while Europeans are more likely to expand to other European countries before coming to the U.S. Equally Asian companies were more likely to expand regionally before coming to the U.S.
- 11. © 2015 Copyright Vision & Execution Financial Resources • Q9: To enter the US market, how are you obtaining or planning to obtain the necessary financial resources? • Base: 27 Less than 10% expect to get U.S. investment to fund their presence in the U.S. The vast major of respondents expect to source their investment in the U.S. through home country resources or self-funding.
- 12. © 2015 Copyright Vision & Execution Financial Resources • Q10: If you are/were seeking investment funds from U.S. sources, how quickly did you expect to secure funding? • Base: 1 Only one of the respondents expected to secure U.S. investment to aid their expansion to the U.S. There was, however, a very unrealistic expectation about how quickly U.S. investment could be secured.
- 13. © 2015 Copyright Vision & Execution Financial Resources • Q11: How quickly did you expect to generate revenue from your U.S. expansion? • Base: 25 Nearly three-fourths of the respondents had realistic to fairly conservative expectations about how quickly they would produce revenues in the U.S. Surprisingly business executives were more conservative in their expectations than the support organizations (VCs, Trade Agencies, Incubators) were. The companies who felt they were somewhat or very successful were somewhat more inclined to expect that they would generate revenue in less than a year.
- 14. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q12: What were your expectations about how easy it would be to hire U.S. resources? • Base: 25 Nearly two-thirds expected U.S. salaries would be higher than their home country with 40% thinking U.S. Human Resource policies would be more generous. It was almost evenly split between expectations that finding the right talent would be easier vs. harder than the home country. Support organizations expected hiring would be easier and less expensive than the executives.
- 15. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q13: What were your expectations about how hard or expensive it might be to set up your U.S. office or subsidiary? • Base: 25 The most challenging activities for companies expanding to the U.S. compared to their home country is securing visas (72%), followed by finding appropriate insurance (56%), banking/credit resources (52%) and distribution channels (40%). Finding office space (44%) and legal services (32%) was considered easier than the home country.
- 16. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q14: What were your expectations about how hard it might be to find the right service providers to help you with your U.S. market expansion? • Base: 25 Nearly half felt finding the right service provider to help enter the U.S. market was about the same level of difficulty as in their home country. Less than one third of the respondents found it harder; a small percentage felt they didn’t need service providers. Interestingly executives expected finding service providers would be easier while support organizations expected it would be harder.
- 17. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q15: What types of service providers were you looking for? Check all that apply. • Base: 24 Sales/business development and legal were the most commonly sought service providers followed by marketing. Companies who felt they were somewhat or very successful made broader use of service providers whereas the companies who didn’t feel successful were focused almost exclusively on sales support.
- 18. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q16: In terms of company resources, how challenging did you expect supporting your expansion to the U.S. to be? • Base: 23 Most companies expected to experience some degree of challenge associated with spreading resources over multiple geographic regions. Surprisingly the companies who were least successful expected the fewest challenges. Keeping a strategic focus was the least concerning overall while managing staff resources proved to be the most challenging.
- 19. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q17: From a functional area of expertise please rate which of these functions were the hardest functions to replicate in the U.S. or you expect to be the hardest to replicate? • Base: 23 There was virtually no difference between the functions in terms of difficulty replicating in the U.S. By the slightest margin customer service (2.65) was considered the hardest to replicate compared to sales (2.25) being the easiest. U.S. financial resources were not very high either relative to other functions so perhaps most companies were relying on their home country resources for this function.
- 20. © 2015 Copyright Vision & Execution Organizational Resources & Challenges • Q18: Which of these functions did you think would be the most expensive functions to replicate in the U.S.? • Base: 21 By comparison engineering and technical positions were expected to be the most expensive to replicate followed by professional services and sales. It appears that cost is the driver to what made replicating engineering and professional services difficult. Technical support while considered one of the hardest to replicate, was not due to salaries as it was considered 4th in terms of expense to replicate. Equally while customer service was considered hardest to replicate it was considered the least expensive to replicate.
- 21. © 2015 Copyright Vision & Execution Level of Success • Q19: Based on what you expected to achieve by now, how successful have you been in your attempt to enter the U.S. market? • Base: 21 While no company felt they had been completely unsuccessful only about 20% claimed they had been very successful; most respondents indicated they had been somewhat successful.
- 22. © 2015 Copyright Vision & Execution Level of Success • Q20: What do you think was the most effective thing you did or will do in planning to enter the U.S. market? • Base: 21 One third of respondents felt that having a physical presence was critical to their success in the U.S. Nearly 25% felt the most important thing was conducting a market opportunity assessment. The most successful companies felt that having a U.S. presence and a conducting market opportunity assessment were key to their success.
- 23. © 2015 Copyright Vision & Execution Level of Success • Q21. Based on your experience, would you still have tried to enter the U.S.? • Q23. Based on what you know now, what would you do differently? Most companies felt that they had no choice, they ultimately needed to enter the U.S. market for their global success. Representative responses for what they would do differently include: • We would pour much more marketing efforts to boost our sales in the US. • Not giving up and adjusting periodically to meet the demands of customers is necessary • Be less optimistic in the planning and visa challenge • Seek investment specifically for US expansion • Not coming so early • Have a longer runway of funds • Do it faster • Only work with professionals 2/10/2015
- 24. © 2015 Copyright Vision & Execution Level of Success • Q21: Based on your experience, would you still have tried to enter the U.S.? • Base: 21 Even among those who felt that they had been somewhat unsuccessful no one felt that they should not have tried to enter the U.S. market.
- 25. © 2015 Copyright Vision & Execution Resources Desired • Q24: Vision & Execution is developing new services to help companies enter the U.S. smarter with less risk and financial overhead. The following questions capture your feedback on these services so we can refine them to better meet the needs of companies entering the U.S. Our initial service validates your company’s U.S. business model before you make deep investments. We conduct customer research and identify key competitive features for success. Our experts recommend a launch strategy based on the market opportunity and produce a three year financial model to determine if (or when) it’s financially worthwhile to enter the U.S. market. How likely are you to use this service? • Base: 39 Nearly half of respondents were somewhat or very likely to use a service to conduct market validation prior to entering the U.S.
- 26. © 2015 Copyright Vision & Execution Resources Desired • Q26: In addition to the market validation service, we can serve as your interim U.S. subsidiary. This service is available only if your U.S. business model validation analysis indicates the U.S. market is a good opportunity for your company and a U.S. subsidiary could be profitable within three years. With this service, we staff all of the functional areas needed to support your business through our team of proven partners (for example: telesales, outsourced customer service, HR services). Our primary team is directly responsible for sales, marketing and order processing (fulfillment). You buy only the services you require from our seasoned team of experts rather than needing to hire full-time staff. Fees for this service would include a combination of time and materials plus commissions once sales are initiated. We can also make introductions to our hand-picked service providers for your business needs such as corporate or immigration attorneys, insurance agents, accountants, and relocation specialists. How likely are you to consider this service? • Base: 35 40% of respondents were somewhat or very likely to use an outsourced U.S. subsidiary.
- 27. © 2015 Copyright Vision & Execution Resources Desired • Q28: Are there other services you would want from a U.S. market expert to make it easier to enter the U.S. market? • Base: 35 The other services that companies were seeking from a U.S. market expert were: Networking/Sales/Biz Dev – 2 responses Legal – IP Protection/Visas – 2 responses Accounting – Payroll/Taxes – 2 responses Fundraising - 1 response Localization/Language Support – 1 responses
- 28. © 2015 Copyright Vision & Execution Ensure Success in the U.S. • Understand what business need your product/service fulfills in the U.S. • Make appropriate adjustments to localize your product/service for the U.S. • Ensure adequate lead time for visas and market planning • Establish some form of U.S. presence to build credibility with customers • Make greater use of U.S. experts across a broad range of functional areas to gain local market knowledge faster
- 29. © 2015 Copyright Vision & Execution Methodology • The survey “Entering the U.S.: Challenges & Victories” was fielded in Q4 2014. A total of 68 respondents participated in the survey. Respondents included a cross section of employees from international companies and support organizations such as trade agencies, incubators and venture capitalists. 2/10/2015
- 30. © 2015 Copyright Vision & Execution About Vision & Execution • Vision & Execution, Inc. helps companies turn innovative ideas into global success. We specialize in identifying the most cost effective route to building a global business. We bring our breadth of business expertise – business creation, strategic marketing, innovation sourcing, product development, and sales and operations program development – to help companies realize their vision. • Our services include: – Advisor on Call – U.S. Market Launches – Contract Business Development for Early Customer Wins – Outsourced Sales & Marketing for Year One Revenues 2/10/2015
- 31. © 2015 Copyright Vision & Execution How to reach Vision & Execution • Phone: +1 650 233 0256 • eMail: [email protected] • Twitter: @visionexecution • Blog: www.visionandexecution.com/blog 2/10/2015