The United States is one of the first markets many companies consider when they start thinking seriously about international growth. The attraction is obvious: a very large customer base, deep pools of capital and talent, sophisticated distribution channels and the possibility of building a business at a scale that may be difficult to achieve at home.
Those advantages can also make the US deceptively attractive. Companies see the size of the market and assume that even a small share would transform the business, without examining what it will cost to acquire customers, support the market and compete against established local players.
When I work with companies considering the US, I am less interested in the theoretical size of the opportunity than in whether the business has a credible way to win. The US can be a very rewarding market, but it can also absorb a great deal of time, money and management attention before the commercial model is proven.
Start with a specific customer, not the size of America
The US is too large and varied to be useful as a target market on its own. A company selling enterprise software to healthcare providers is looking at a completely different opportunity from a consumer brand selling through specialist retail or a manufacturer supplying the automotive industry.
I want to know who the customer is, where those customers are concentrated, how they currently buy and what would persuade them to consider an overseas supplier. Those questions usually narrow the market much faster than looking at national population or GDP.
Geography also matters. Industry clusters, customer concentration, distribution infrastructure and buying behaviour vary considerably between states and regions. For some businesses, Texas may be a more logical starting point than California. Others may find their strongest opportunity in the Midwest, the Northeast or a particular metropolitan area.
A focused entry point gives the business a better chance of understanding customers properly, building a relevant network and concentrating investment where it is most likely to produce results.
Be realistic about how competitive the market is
The scale of the US attracts companies from around the world, which means international entrants are often competing against strong domestic businesses as well as other global players.
A proposition that performs well at home may enter a market where customers have dozens of alternatives. The company needs a clear reason for buyers to pay attention and enough evidence to support that claim.
I would want to understand who the main competitors are, how they position themselves, what customers value in the category and where there are genuine gaps. Price may be one source of advantage, although that advantage can disappear quickly once US sales, marketing, logistics and support costs are included.
The more crowded the category, the more precise the positioning needs to be. A broad proposition that works well in a smaller domestic market can become difficult to distinguish in the US.
Understand what it will cost to acquire customers
Companies sometimes underestimate how expensive it can be to build awareness and demand in the US. Digital advertising, trade events, salespeople, agencies, distributor margins, retailer fees and customer acquisition activity can all add substantially to the cost of entry.
This can be particularly confronting for companies that have grown successfully at home through relationships, referrals or a relatively concentrated customer base. Those channels may still play a role in the US, but the scale and competitive intensity of the market can require much greater investment to create a predictable sales pipeline.
I would want customer acquisition costs included in the commercial model from the beginning. Strong margins at home can erode quickly if the company needs to spend heavily to generate every new customer.
Choose the route to market around how Americans buy
There is no default route into the US. Some companies can sell directly from their home market, while others need distributors, representatives, retail partners, ecommerce platforms or a local sales team.
The choice should reflect how customers in that category buy. I would want to understand who makes the purchasing decision, how long the sales cycle is, what level of service customers expect and whether a partner genuinely provides access or capability that the company would struggle to build efficiently itself.
Distributors can accelerate market access, but they take margin and require active management. A local sales team offers greater control while creating fixed cost and management complexity. Direct ecommerce can work well for some businesses, although fulfilment, returns, sales tax, customer service and acquisition costs all need to be built into the model.
The strongest route to market is the one that gives the company credible access to customers at an investment level and margin structure it can support.
Understand the full cost of entering the US
One of the biggest traps in the US is underestimating how much investment sits between identifying demand and building a functioning business.
We worked with an Australian technology-enabled consumer products company that had already demonstrated international demand and saw considerable potential in the United States. When we worked through what a serious direct entry would require, the investment extended well beyond putting a salesperson on the ground.
The company needed regulatory certification, substantial insurance cover, local warehousing and fulfilment, sales representation, customer support and a meaningful marketing budget. Building the local capability properly was likely to require a multi-million-dollar commitment before the US operation reached the scale the founders ultimately wanted.
That analysis changed the market-entry decision. The company chose to work through a distributor rather than establishing a fully independent US operation from the outset. The distributor model gave it access to the market without carrying the full fixed cost of building local infrastructure before demand had been proven at scale.
There were trade-offs. The business gave up part of the margin and some control over the customer relationship, but it materially reduced the capital required to enter the market and allowed management to test the opportunity with less financial exposure.
This is why I like to model the market from the customer backwards. What will the US customer realistically pay? What does it cost to reach and serve them? Which partners need a margin? What infrastructure is genuinely required at this stage of growth? Those answers often determine which market-entry model makes commercial sense.
Treat the US as a federal system
International companies sometimes underestimate the extent to which state-level considerations affect the operating model. Federal law is important, but states also play a significant role in taxation, employment, licensing, incentives and other aspects of doing business.
Where the company establishes an entity, hires employees, holds inventory or develops a physical presence can therefore have practical and financial consequences. State and local governments may also offer incentives for investment, particularly where businesses are creating jobs or establishing facilities.
Tax exposure needs specialist advice because the position depends on what the company actually does in the United States. I would bring that work into the market-entry process early enough to influence the structure, rather than dealing with it after people have been hired, leases signed or inventory committed.
Decide how much localisation the US really requires
Companies from English-speaking markets often assume that the US requires very little localisation. The language barrier may be lower, but customer expectations, terminology, pricing, product specifications, payment methods and sales practices can still differ considerably.
B2B companies may find that American buyers expect a more direct commercial proposition, stronger evidence of return and quicker access to local support. Consumer companies may need to adjust product ranges, sizing, pricing, promotions or customer service.
Brand recognition and customer references also tend to travel less effectively than companies expect. A business with a strong reputation at home may arrive in the US with very little credibility, which places more pressure on proof points, reviews, customer evidence and local relationships.
The aim is to understand which adaptations will materially improve the customer’s willingness or ability to buy.
Be clear about how much local presence you need
A US presence can improve customer access, responsiveness and credibility, but it needs to be designed around how the business will actually operate.
We worked with an Australian industrial products company that had been building its US business for several years. The founders were splitting their time between Australia and the United States, had established a physical presence in the US and were spending significant time on the ground developing customers, managing distributors and supporting the operation.
They returned to Australia shortly before the COVID pandemic closed international borders and suddenly found themselves managing the US business from the other side of the world. The experience exposed how much of the operation still depended on the founders being physically present.
There were practical issues around inventory, shipping reliability and the movement of regulated goods. The business was also carrying the cost of its US infrastructure while senior management could no longer be there to oversee it. Managing the sales operation, distributors, finances and day-to-day communication became considerably harder from Australia.
The challenge eventually became broader than deciding whether the company needed an office in the United States. It needed an operating model that could function without the founders personally holding the pieces together. That involved strengthening local sales capability, improving logistics and inventory management, clarifying financial arrangements between the Australian and US businesses and creating better management rhythms across the two countries.
Most companies will never face the exact disruption created by the pandemic, but I still find the underlying question useful: if the founders or senior leadership had to return home for six months, would the US operation continue to function effectively?
An office, warehouse or US entity may be part of the structure. The people, systems and responsibilities around that presence determine whether the business can operate without constant intervention from head office.
Make sure management can support the market
The US can place considerable demands on the leadership team. Time zones create longer working days, customers and partners expect quick responses, significant sales opportunities may require senior involvement and local employees need effective management.
Those demands are manageable when the market is sufficiently important and responsibility is clear. Problems arise when the US is one of several international initiatives competing for the same management attention.
Before entering, I want to know who owns the market, which decisions they can make and how much leadership time the company is prepared to commit. The stories above illustrate both sides of this issue: choosing a route to market that reduces the initial burden and building an operation that can eventually function without the founders personally managing every moving part.
Questions I would want answered before expanding into the US
Before committing significant capital, I would want clarity on the customer, route to market, economics and operating model. Which customer segment are we targeting first, where are those customers concentrated and why should they buy from us rather than an established US competitor?
I would also want to understand how much it will cost to acquire those customers, which sales or distribution model gives us credible access to them and what margin remains after US-specific costs. The business needs a realistic view of the localisation, tax and state-level considerations involved, the amount of local presence required and the management commitment the market will demand.
Those questions tell us considerably more than the size of the US economy. The opportunity needs to be attractive enough to justify the resources the company will have to put behind it.
Is the US the right next market?
The United States can be an exceptional growth market for an international company with a strong proposition, sufficient resources and a clear path to customers. Its scale can also magnify weak positioning, poor economics and an under-resourced market-entry plan.
I would choose the US when the company can identify a specific customer opportunity, compete convincingly, support the cost of acquisition and build an operating model that can grow with the market. Testing those assumptions before making a large fixed investment gives management better information about where to commit capital and how quickly to scale.
If the US is part of your international growth plans, Dearin & Associates can help you assess the opportunity, identify where to start and pressure-test the commercial model before you make a larger commitment.
Book a US Growth Check, a 15-minute conversation to pressure-test the opportunity and your smartest next move.
