The narrative of making it in America is a compelling one and, of course, there is some truth to the story. The US market is highly attractive due to its substantial money spend, experiential buying behaviour and the sheer volume of small, medium, and enterprise businesses.
According to Investopedia, 90 per cent of startups fail. For startups wanting to enter the US, things can be just as tough. A key issue is that most companies overcommit to the US too soon; in other words, they race to sell rather than race to learn and validate.
JJELLYFISH, a consulting firm that helps B2B startups successfully enter and conquer the US, says that for many global companies, the US can make up to 50–60 per cent of their total addressable market. As a result, it is natural for founders to focus on the question of when to expand into the US, while the first question they really need to evaluate is whether it makes sense.
B2B startup founders, if you have been thinking about expanding into the US, first answer the following six questions.
- Do I have the time to seriously consider an expansion into a brand-new market as competitive as the US?
If you do, your first task is to spend the next three, six or nine months talking to prospective key buyers whom you believe deeply understand and feel the pain/problem your startup aims to solve. See if you can get at least 10 executives to respond to your request for a conversation. If they are willing to get on a call with you, that is your first sign of potential success.
Discuss the problem your company is passionate about solving and learn if it is a real problem for US buyers. Listen for what the problems are and uncover their pain points, then listen to what is not being said. Be comfortable with silence and keep listening.
According to Jen Abel, Co-Founder of JJELLYFISH: “You can’t sell until you learn about their current world. What is the problem? What is the implication of not solving that problem? You must be problem-led, not solution-led, in these discussions.”
From this qualitative research, summarise your findings, identify themes, and share and discuss with your team, Board and/or investors. Together, keep answering this next question:
- What are the unmet needs in the US that our company can answer?
Based upon your early research and discussions, decide if there is a real problem for your company to solve for US buyers. By real problem, I mean one that is faced with frequency and intensity.
The more focused you become on specific and targeted buyers and their pain points, the more you become known as an expert. “Founders need to demonstrate that they understand their buyers’ business and their pain points,” Abel says. People invest in people, and they want to buy from specialists they trust.
From these early discussions, you might learn that the problem you address in your local market is not a significant enough issue in the US. If so, be glad to have discovered this now. You will have saved yourself countless hours of work, dollars spent and frustration, only to be among the 90 per cent of founders who fail and have to walk away. However, if you and your team are encouraged by these early findings, the next question to ask is:
- What percentage of our total addressable market should come from the US?
If 30 per cent or more comes from the US, then it is never too early to make the move and consider expansion, according to Abel. However, don’t forget the importance of leadership here – initial entry and acquisition of early-adopting customers should be driven by the founder. This then begs the next question:
- Am I willing to take part of our revenue and/or take out a loan to really prove out this market?
If so, why? What is the story you want to tell in the next three to five years? Can you get that from your local market, or can it only be achieved by expansion into the US?
Founders, you must have the time, attention and energy to commit to learning what you don’t know. You must also be willing to invest money into testing out a new market and – especially in the early days of a business – be able to show US buyers what you have done for their peers. Just don’t over-commit at this stage! You are only experimenting to learn if the US is a real opportunity for your solution.
- How will we test and measure?
Defining success in the early stages of sales requires clear measurements. If you cannot measure what you are doing, you cannot learn or improve. In order to measure and manage the market pulse and whether the market is aligned with the problem you are trying to solve, keep a close track of your conversions and not just revenue.
How many folks were inspired to have an initial phone conversation? How many of those then advance to a second call? If you cannot measure what you are doing, you cannot learn, improve or build conviction around future decisions.
- What needs to be our approach to closing initial B2B sales?
According to JJELLYFISH, the best strategy for closing B2B sales is always the founder selling to executive buyers. “There is a special relationship between a founder and executive buyers,” says JJELLYFISH Co-Founder Justin Lawson.
However, founders often need coaching in their approach and their communication. They need to be intentional in what to share and when. They must understand there is a very human, nonlinear process to follow that moves from introduction to building rapport and a relationship (everything gets accomplished through human relationships) to discovery calls, and only then to the pitch.
Founders who understand that executives need to see themselves as part of the vision tend to succeed. Again, people always buy from other people. In order for your B2B to make it in the US, people must want to buy from you, the founder.
If you cannot first sell yourself and your vision to the buyers, a non-founder sales hire will never succeed. Given the rewards of making it in America are so high, founders are right to dream and plan for expanding Stateside.
So, if you can confidently answer these six questions, then it is no longer about whether you should expand into the US, the question is when.
