Small Business: How to do business in the US

Adam Bennett, NZTE's trade commissioner for the US West Coast.

This week, a look at Kiwi small business owners making inroads into the US.

Adam Bennett is NZTE's trade commissioner for the US West Coast.

What's the current climate like for smaller New Zealand companies doing business in the US?

The US market is rightly seen as an enormous opportunity for New Zealand companies, but without a doubt the market is really challenging for smaller New Zealand companies. Having a great idea is only part of the story, and small New Zealand companies are considered even smaller when they're put into the US arena.

For companies looking for investors and partners, it's not all about the bottom line initially; the way companies are measured is as much about product optimisation, investment, and customer acquisition numbers as profit and revenue in the startup phase.

What trends are you seeing in the US market at the moment in terms of growth sectors?

The fastest growing sector is big data, which is huge currency in the US. Artificial Intelligence - or machine learning - is successfully mining this field and creating patterns and plans of how to sell, automatically.

Tech is king on the West Coast, and we're increasingly seeing nimble New Zealand companies using this sector to get alongside some huge American entities. So, for instance, Vend and Xero are on the gold track with Apple as part of a select group of 24 business app developers Apple has tapped into to help identify business opportunities for the iPad.

It's also critical for traditional companies to embed technology into their day to day; it's part of the fabric of every successful company. What I see New Zealand companies do well is offer unique solutions that help other companies be more efficient.

What are some other New Zealand companies you're seeing doing these kinds of things well?

A couple of examples of the right attitude and approach include recent announcements by BurgerFuel and Orion Healthcare. BurgerFuel has astutely positioned itself in the US through partnering with OhCal Foods LLC, a major franchisor of Subway restaurants, to spearhead the company's entry into the US Market.

And Orion Healthcare is building a credible reputation for itself with the establishment of its 'Centre of Excellence' in Scottsdale, Arizona.

More generally, what are some of the strategies you see Kiwi companies using that you think are working well?

It's about knowing your story in the context of your customers. A founder or CEO who can talk with passion about their company and why it solves a problem succinctly, directly and with humour will do really well. As a nation we're getting better at this, but I'd recommend coming here and trying your story out - which means honing your elevator pitch again and again.

Also, US reference customers are incredibly powerful. To be brutally honest, success in Australasia is often meaningless without a US example. I'd say use what you've learnt growing your business in Australasia to show the US you can do it, but don't expect a US customer to take Australasian market share as validation.

I also admire Xero for building a New Zealand ecosystem around them; I think they're a catalyst for helping other New Zealand companies to succeed.

COMING UP: A large proportion of Kiwi companies don't have a plan for exit or succession. Why is that - what are some of the barriers? And what have been the experiences of some small business owners who have actually made these kinds of plans? If you've got a story to tell, drop me a note.

On the other hand, what are some of the common pitfalls you're seeing Kiwi companies fall into in the US?

Not having a 'plan B'. Too many times we see a perfectly polished, NZ-constructed 'plan A', only to see the people in-market requiring a really different approach. I think you're better to have a Minimum Viable Product or Plan (MVP) to get you here, and then throw it out there.

Another pitfall is 'phoning it in'. It's very rare to see a New Zealand company succeed in the US without its senior people actually on the ground, particularly in the establishment phase. Come here for 90 day blocks at least, but preferably you should commit for a longer-term stay.

And not following up on leads is another frequent mishap. US customers expect immediate action, and building your network is paramount when getting started in-market. Building that network isn't easy: it requires proactivity, immediacy, consistency and professionalism.

What are your three top tips for SMEs wanting to succeed in the US?

1. Have a 'plan B', or at least be ready to build one fast.

2. Commit to the market for the long term by being here, and get great US talent and advisors around you.

3. Get US money that comes with advice and networks - these are invaluable, even if it's a lower amount than you can get in New Zealand.