Doing business in the US. Challenge #1 : Absorbing the cost

This past fall, we conducted a survey with French entrepreneurs based in the U.S. on the harsh reality of a U.S. development. Our goal was to get a first hand understanding of the main challenges French founders are facing when doing business in the U.S., as well as gather tips to best prepare newcomers. This post presents part of the survey results.

If you ask innovative entrepreneurs in France about their international plans, most of them will probably mention the U.S. as their top priority. For a good reason — the U.S. remains the largest economy in the world, with considerable market opportunities, and large amounts of funding.

However French CEOs tend to underestimate the gap between the U.S. and their domestic market. For each success story in the U.S., dozens of French companies are closing their U.S. offices or stagnating with a few customers and near-zero growth.

What are the main reasons for their struggle? Our Sales Factory colleagues, Marie Buhot-Launay, Sylvia Gallusser, Baptiste Gregori and Whit Howland decided to take a closer look at the top challenges faced by French entrepreneurs in their U.S. development and identified 6 main challenges.

This is the first challenge revealed out of the 6:

“Expensive to run business here”

“The high cost of everything”

“Setting up the sales channel: cost”

Insights from local experts:

• Salaries and cost of living: If you have offices in major cities like San Francisco, New York City or Boston, you need to anticipate higher salaries than what you are used to in France, because of the much higher cost of living. If you can’t afford them, there are other less costly options in the U.S. (Atlanta, Minneapolis, Austin, etc)
• Cost of service providers (lawyers, etc): As your business is growing, you will need to rely on many different service providers to do business. Some are very specialized and have much higher hourly rates than their French counterparts. Don’t forget this aspect in your G&A.
• Marketing and Sales: “You have to spend money to make money” is a common saying in the U.S. Expect raising your marketing and sales budget if you want to gain awareness and visibility and nurture your sales funnel.

We conducted our Sales Factory survey between August and October 2018 among 39 French entrepreneurs in the U.S. Our sample is not representative, but aims at highlighting key challenges quoted by French CEOs in the U.S.

Here are some key facts about the respondents:

• 87% are B2B companies
• Most represented industry is IT (64%) followed by Healthcare (23%)
• Size of their companies varies between 7 and 400 employees globally (median of 68) with 0 to 120 employees in the U.S. (median of 5)
• They raised from €0 to €140M including grants and public funding (median of €7M)
• The respondents who indicated their global revenue had between $1M and $75M (median of $9M)
• The respondents who indicated their U.S. revenue had between $150K and $37M (median of $1.65M)
• 17% of them started doing business in the U.S. over 10 years ago, 29% between 2009 and 2014, 23% in 2015–2016, 29% in 2017–2018
• 74% of them feel fully or partly successful:

Big Bang Factory is a unique growth accelerator located in San Francisco, New-York and Boston. Big Bang Factory has developed a unique methodology based on two pillars to optimize a U.S. development for global B2B companies:

• A lean approach to define and validate a dedicated U.S. strategy
• A structured system to implement and execute a sales plan while minimizing resources

Our iterative approach enables us to constantly refine positioning and execution in order to successfully penetrate the U.S. market.

Remember the majority of amazing stories get done casually over a coffee or a drink. Investors with a question? Entrepreneur with a plan?
Get in touch to find out more.