How to Export to the U.S.: Start by Getting Focused

Think of the country as many different markets

With a population of more than 300 million people and a 20 per cent share of the global economy, the United States is by far the richest market in the world. It’s no wonder that many Canadian business owners want a piece of the action for their business.

However, many Canadian companies have found over the years that geographic proximity and a familiar language and culture are no guarantee of success south of the border.

The term “U.S. market” doesn’t accurately reflect the country’s economic reality. The United States is in fact made up of several smaller markets that vary tremendously one from the other.

Rather than attempting to conquer the entire, vast nation, it’s best to focus on a particular region to optimize your company’s chance of export success.

“You shouldn’t tackle the whole market at the beginning because it’s just too big,” says Carl Gravel, Director of International Expansion at the Business Development Bank of Canada (BDC). “It’s like doing business in many different countries.”

Consider regional differences

It’s not only regional differences in demographics, consumer tastes, economic makeup and geography that can affect your business’s export success. There are also variations in laws, regulations and logistical factors to consider.

“There are so many things to understand in each and every state: The business culture, the incentives to invest there and the regulations,” Gravel says.

Export Development Canada (EDC) breaks down the United States into 12 regions, each with its own export opportunities. It’s important to understand which of these areas offer the best chance of success for your business.

“Chicago in itself is a market,” Gravel notes. “For small to medium enterprises, Chicago or New York or Seattle is probably already a big enough market.”

Research and planning are a must

It all means you have to do plenty of market research and planning before launching your U.S. venture. Many Canadian companies fail because they go with inadequate financial resources, a lack of understanding of the market they’re targeting and products that are not clearly enough differentiated from those already available.

Elana Rosenfeld, CEO of Kicking Horse Coffee, says her company has discovered how important it is to be well-prepared and take a regional approach to entering the U.S. market.

“The first time we went into the U.S., we were not very strategic about it, and we learned very quickly how different the U.S. market is from the Canadian market,” Ms. Rosenfeld says.

“Going back a second time, we went with the West Coast region because it has such a strong coffee culture,” she says. “It was a great market to get our foot in the door.”

Made local connections

Once Kicking Horse identified its target region, the company hired a regional sales manager and made it a priority to reach out to local partners.

“It’s a good idea to get as much help from as many local partners as you can,” Rosenfeld says. “Talk to your retailers, brokers, and distributors. Ask them questions and get their advice before you go in.”

For Kicking Horse, the step-by-step entry to the U.S. has proved successful. “The U.S. market is a huge area of growth for us,” Rosenfeld says.

Lessons learned

Be prepared to be patient—This is a long-term project. It can take several years to become profitable in a new market. So make sure you’re ready both financially and emotionally.

Be aware of the competition—The U.S. market is the most competitive in the world. Study market trends and adapt your products accordingly.

Be present—Visit your target markets regularly and speak to partners, customers and industry contacts. Consider hiring local representatives.

Be strategic—Develop a strategic plan for your venture including a budget, marketing plan, pricing strategy and overall action plan before entering the U.S.

Be open to outside help—BDC, EDC and the Trade Commissioner Service can help you with advice, contacts and other services. Local chambers of commerce and trade associations in the U.S. can also provide valuable resources.

This article is courtesy BDC for Small Business Week in Canada.