Today's blog post is from a guest blogger: John Wicker, Managing Director of Secure Foothold, who specializes in working with European software companies that are entering the U.S. market for the first time.
Now, from John...
When Judy asked me to talk about the three biggest mistakes European software companies make when making a move to the United States my first reaction was ¬?Only 3!!¬? and my second was to think about some of the mistakes I have made as an executive for and consultant to several software companies ¬? who have fortunately ultimately been successful in making the move ¬?across the pond.¬?
Most mistakes come from a lack of understanding of the U.S. market or perhaps a hope that it¬?s pretty much the same as the country in which you are currently doing business.
So here are my top 3 mistakes:
MISTAKE 1 would have to be Insufficient Planning (in many cases no planning). This can be overcome by taking a measured view, investing in research and extensive planning ahead of time, and particularly in seeking input from the locals.
MISTAKE 2 is Insufficient Budget, often the result of unrealistic expectations of the speed with which sales will be made. We recommend that you limit your initial expenditure to a level that you can fund for twice as long as you believe it will take to build a firm revenue base in the U.S. A reasonable projection is to allow about 3 years.
MISTAKE 3 is an inability to grasp the magnitude of the difference between Europe and the U.S. It is, for example, twice as far from Boston to San Francisco as it is from London to Moscow. Salaries are typically 20-40% higher in the U.S. and benefit costs are generally higher too, especially if you choose to provide health care, which most professional employees expect.
Not withstanding the above, if you succeed you probably will double the value of your company.
We see established companies achieving a third to a half of their revenues from the U.S. market, which is by far the largest individual market for software in the world, accounting for some 40% of total worldwide software sales.
The more you understand about what to expect, the more success are you likely to experience. For some additional thoughts on issues to include in your planning see ¬?Coming to America,¬? a white paper available at www.securefoothold.com.