Doing Business in the US & Analysis
Contemplating to do business in the US, which is the most advanced economy in the world requires a through knowledge of what the business culture in the US is. That is so because without the right kind of careful planning and preparation the success of any venture will be very limited. Hence, the best place to start might be to come up with a strategy and business plan, especially if the business is trying to sell industrial goods in the US simply because the market for industrial goods is somewhat different than selling consumer goods, where the size of the buyers is very large.
When it comes to industrial goods the transaction is going to be business-to-business for the obvious reason that it is only those that are in business that want to buy any kind of industrial good, which could be capital goods too. When that is the case, the best place to start is to come up with a business strategy. After surpassing the feasibility check, what follows is to make a general assessment of the customer base, which would reveal the approximate available prospects.
Since specialization is the norm in an advanced economy such as the US, whatever industrial good is going to come into the market could only have a limited number of customers. Once the probable prospects are spotted the next step will be to study and identify their needs, their buying habits, and to find a suitable selling process that will be effective while doing business with these limited number of prospects. Since there are other competing businesses doing similar things, the end result will be aggressively competing for a limited number of prospects and that will always make the job difficult.
The sellers will have to know the best channels to reach the available limited number of prospects since advertising will not be very effective as it is with the general consumer that is accessible by using numerous channels. When it comes to doing business with a limited number of prospects putting ads on TV, which is very effective for the general population will not work for business-to-business advertising. There is also the job of comparing the strength of one’s product with the competition, because unless there is some optimum advantage, businesses will not switch to other goods or suppliers.
There has to be something attained by using the particular product, or at times there could be a price advantage over comparable products, in order for businesses to decide to switch to newer products or goods. The fact that a product or a good is much cheaper than competing products or goods is not also a guarantee for attracting buyers as businesses avoid going for cheap products that will reduce the quality or the effectiveness of what they are bringing into the market.
Over all, it is important to know that it is not going to be highly competitive to sell in a market such the US, especially when it comes to industrial goods, unless those new entrant goods have an exceptionally high quality. This by itself will force new foreign businesses that are planning to start a business in the US to look at their resources and goals. It is not possible to dismiss these facts since they can make or break any venture, because it is important to know which of the prospects will be willing to buy new untested industrial goods in the US market taking the risk of becoming the first to use that product.
Even if the product might not be new, switching a supplier is always a slow processor since businesses heavily rely upon suppliers for the continuation of their business, as well as for the quality of service they are availing. In addition, businesses will do a thorough study of what they would gain for participating in such a risk prone transaction such as giving a new business the opportunity to do business. Therefore, finding a channel to get to them might not be enough.
What is important is to be in a position to articulate what they will get by switching to the new product or supplier over what they were already using and that will require a through preparation. At times the company salesmen could do the job or when a new business starts in a market such as the US it would be easier to involve middlemen companies that will charge for their service and let them do the going around and finding the prospects. Whatever channel is chosen, before contemplating to do business in the US it is very important to do a market viability and validation test.
It is possible to accomplish that without setting a foot in the US and the outcome attained from such test will lead to the next strategic step, which is market analysis and assessment. The business world looks at niches more than anything else without compromising what they are doing, and before making decision to switch or to introduce a new industrial good they do their viability and validation test since it is going to be an expensive undertaking to make a switch, especially if it is going to be in a large scale.
Unless it is a onetime dealing, it would mean that changing of the supply chain will have to stay for a much longer haul. What this highlights is the new business will have to study the competition very thoroughly since it does not make sense to do business in the US without realising profit as the business will not stay afloat. The new foreign entrant into the particular market will require introducing niches and advantages and it has to be aware that there is enough demand and a shortage of supply.
After spotting the existence of these elements, what makes a big difference next is the kind of marketing applied demonstrating what the product offers for the prospects that are buying it. Unless there is a thoroughly executed marketing plan in place, a winning product might fail to sell. Nevertheless, with a good marketing plan average products could outsell competing products simply because the marketing plan had enabled the buyers to see the kind of niche they are getting by buying the goods or products.
In a market such as the US where there are already local as well as foreign companies competing aggressively to garner market share, unless a new company makes its marketing plan very effective it will fail to get buyers. One obvious area to look at when introducing an industrial product, manufactured or processed abroad is if there is demand for that particular product unless it is very similar with the other products it is going to compete with, because some kind of a product development strategy might be required to put it in par with the other competing products.
But if the industrial product is a natural resource such as oil or any other metal or mineral that is similar with any product originating from around the world, as long as it meets the required standard it could garner market share without much upgrading, although it would require aggressive marketing and the introduction of incentives to beat the competition. If what is involved is a capital good of any kind there has to be a strategy in place to bring it to par, surpass or outdo existing products.
That requires resources and expertise that have to be in place preferably on the outset to attain any success, although it is possible to introduce such capabilities on the go. Pricing strategy is also crucial where introducing incentives will make it easier to steal customers from others, although there is so much incentive to introduce. At times it might be possible to make up for the incentives from the volume sold, where for example, it is possible to beat the competition by charging less with the anticipation the loss could be offset by the volume of sales.
Whatever strategy is applied, it is important to know a market such as the US thoroughly to find out if the industrial good meets the standard, as lower price alone might not sell the product since price is the secondary aspect. The primary aspect is not sacrificing quality since it will make any business lose for the competition that focuses on the quality of products brought into the market. Once satisfied with the overall aspect of the new product it is possible to establish alliance with various businesses that is only possible to upheld by providing an impeccable service.
If that is not the case, all effort could be futile as there is nothing that will prevent the new attained client from forming another alliance with another supplier. After attaining this what is required to make it an ongoing relation is to introduce a communication strategy that is very clear and concise since it is possible for things to go wrong anywhere in the supply chain, including quality and a fallout on the promised proper utility of the industrial products supplied to a customer.
When that happens the customers have to know exactly who to deal with in such a way that with one quick approach rectifying any fallout should be possible. If that is not the case, it is going to cost the client time and money, a good reason that makes businesses switch to new suppliers, whether they are foreign or local. The first important aspect of going into business in the US or elsewhere is to have a product or a service to bring into the market place.
That by itself is a difficult task, but overcoming the problem related to it does not make a business successful. Any foreign business planning establishing itself in the US has to think of sales and marketing strategy if there is any plan and desire to do a big volume of business, a critical point where businesses could become profitable. It is only when businesses are profitable that they could take their venture to the next level, whether it requires innovation or research and development, both of them cost incentive.
Therefore, the second important strategy after coming up with a product is what kind of sales and marketing plan is in place, not only to go out and find a handful of prospect but to meet the optimum possible opportunity in the particular industry or sector. To accomplish that, as long as the capacity is there, a high level of marketing is needed that would require various tools and methods that are changing fast. The advice is to mix in-house sales people with outside consultants, preferably US ones so that the goods brought into the market get the proper exposure using the right channels.
If the industrial goods meet the requirements put in place and compete at the same level with similar goods, what makes a big difference is the strategic marketing applied. It is important that such resource is available before starting a venture in the US simply because the most successful business in any industry can attain a success rate through a highly effective exposure, once the business comes up with a product that meets the requirements and failing in that area for any reason could be costly.
Once the business has started selling and acquiring customers, it is important to implement a strategy that will enable the foreign business to retain the customers that it acquired from the aggressive competitors that will not relent for any reason. Because that is how businesses survive in a highly competitive market such the US, where there are businesses going under, as well as entering the marketplace in a big number.
Those that go under obviously were doing something wrong. Moreover, the new entrants could encounter similar fate unless they acquire new customers and retain them for as long as possible. At times it is possible for a new foreign company to get ahead with the effort of the founders, but in no time they would find out a highly informed, trained and qualified sales force is indispensable, and such a sales force could be in-house or otherwise.
It is advisable to do both, simply because it is costly and risky to recruit a new sales force and train them to do the job, although in the long run they could be more valuable in terms of cost, knowledge and experience they would acquire. Until they reach that level, it is possible to depend on outside sources to attain more market coverage. Using experienced outside sales force would also avail advantage in the sales cycle and the closing rate where the customer could be in a position to realize a lower acquisition rate that will improve their bottom line, and they appreciate that since it is a mutual benefit.
Using outside help also avails advantage especially in a new market by reducing risk and overhead since there is not going to be trial and error. Knowledgeable staff is also better in gathering market and competitive intelligence that is possible to apply to improve the business. While at the same time an outside source with the experience might have a better strategy, methodology, as well as tools and management system.
Whereas, it will take a long time for new recruits to attain such effectiveness, yet it is always useful to allow the new recruits to work with such outside sources so that they will learn from others. There are always some outside consulting firms that will train a sales force, simply because it is not possible to sell by simply opening shop and put ads on various channels, especially when dealing with industrial goods. There will have to be a sales force on the pavement demonstrating the particular products for would be prospects.