Tuesday, August 16, 2022
UncategorizedWhy UK Entrepreneurs Have It Easier Targeting the U.S. VS Europe

Why UK Entrepreneurs Have It Easier Targeting the U.S. VS Europe

Collaborative Post
Photo by Andrew Neel on Unsplash
Photo by Andrew Neel on Unsplash
  • Mara Foundation has recently published a body of research that revealed that Britain is statistically a much easier place to start a business than many of its economic rivals.
  • The study ranked countries on policy, education, infrastructure, and entrepreneurial environment- with the U.K scoring 382 out of 500.
  • The UK was noted for its attractiveness to investors in VC and Private Equity firms, being outclassed only by the US.

Following the hectic Brexit situation- and the consequent political and legal turmoil that followed, a prolific number of business owners in the U.K are increasingly deciding to focus their overseas expansions in the U.S- rather than in other EU member states and economies.

According to a recent article published by the Financial Times the effects of the unprecedented COVID-19 pandemic may have heavily contributed to this as well.

This is because, from the get-go, certain policies and organisational rigmarole meant that the economic damage inflicted by the virus in Europe was far greater than in the United States. 

The European Union’s so-called ‘’output gap’’, therefore, was double the U.S’s (in real terms), meaning that fewer jobs were made and less demand for products and services was generated. 

Europe’s rather ‘’tight’’ public spending, increased business restrictions and red-tape, are projected to set it back significantly in comparison to the U.S.

Generally speaking, times of uncertainty have historically presented the biggest entrepreneurial opportunities for the brave-hearted- particularly for those that are committed to growing beyond their local capabilities.

U.K businesses that are willing and capable of adapting their business so as to fit the specificities of the prominent American market will likely find higher collaboration opportunities than they would in comparison to other EU member states, and access to a much larger market.

Below we discuss the main reasons that have led to the proliferation of U.S based investment by U.K businesses, breaking down the potential benefits and disadvantages in the process. 

Benefits of the U.S Economy

Relatively ‘’Easy’’ Funding Options

Indubitably, every big idea requires adequate funding so as to develop into a profitable business model. 

The U.S market has some of the world’s most highly regarded funding prospects in relation to other EU member states- both in relation to the volume of funds and in relation to procedural rigmarole involved. A policy made to incentivise investment, the U.S offers significant funding to companies entering the country with innovative ideas. 

Having said that, it should be noted that obtaining Venture Capital investors and crowdfunding will be much easier (both legally and pragmatically) if your U.K business first incorporates a United States parent company, as well as if it is categorised as an LLC. 

More information can be found through this resource. 

Increased Post-Brexit Complications

Dealing with the European market- particularly as a British corporation, has become ever more pronounced following the U.K’s withdrawal as a member state. 

Whereas each ‘’member state’’ used to have to accept a uniform set of rules, the U.K’s exit means that- until a new agreement is drafted, a high degree of uncertainty will likely remain. 

According to the Institute of Export and International Trade, finalising an agreement with the US will undeniably take ‘’some time’’, but American consumer demand for overseas products is unlikely to change any time soon. 

The United States Customs and Border Protection- who control trading rules within the U.S, have also imposed a minimum threshold for import taxation of $800 for the United Kingdom. This is very important, as it means that all businesses shipping non high-value items (or not very high volumes of low value items) will pay no import tax. 

This reduction can then be passed down onto their customers- increasing competitiveness in comparison to other EU member states. 

Almost No Language Barriers

For British business owners looking to expand into the United States market, the almost identical language similarities can make it a lot less difficult to close business dealings. 

If a British owner was to expand into further EU member states, however, they would have to incur extra costs as the information on their products would have to be translated into a plethora of different languages so as to be presentable to all member states and conform with the relative European Union Law requirements.

Potential Drawbacks?

Despite the ample benefits, it may be worth considering a couple of the potential ‘’drawbacks’’ of expanding into the U.S (instead of other EU member states). 

Marketing is Generally Less Modest

Unlike other EU member states, American business owners have become experts in marketing strategies that other (more conservative) countries would consider highly invasive. 

Sports broadcasting is a great example of this; in comparison to the U.K, there are a variety of changes relating to ad breaks and sponsored statistics. Another example is prescription medication; whereas the U.S permits advertisements, this is not the case in the vast majority of EU countries. 

Of course, these changes aren’t necessarily going to impact you in a negative way, and perhaps, they will be better suited to your specific business model and personality than the British alternative. All it means, really, is that U.K business owners will have to expect a certain ‘’acclimatization’’ period when initially engaging with the American market.

Language Barriers

As briefly touched on above, the fact that the U.K and the U.S share the same language is both: a massive benefit, and a massive convenience for U.K business owners looking to expand into the U.S. 

Having said that, a certain language ‘’adaptation’’ will undoubtedly still be necessary- particularly if wanting to make a good impression. 

Spellings for example, can differ from the English you are used to. Words ending with ‘’ise’’, for example, will usually end in ‘ize’ in American English. American’s also omit the use of certain letters in some words- such as ‘color’ instead of ‘’colour’’, or ‘’Pediatric’ instead of ‘’Paediatric’’. 

Final Words

Given the uncertain and chaotic environment that exists between the U.K and the other EU member states, America’s rather large and ‘’UK-friendly’’ market has indubitably provided significant financial and political relief to the U.K’s business owners.

We hope you enjoyed reading.

Related Stories