The Biggest Barriers for Startups Entering the American Market

For many international startups, the American market is typically the natural first choice for expansion. Not only is the US the largest economy in the world, but the country also represents the largest and richest consumer market. Because of its size and global dominance, success in the US market often translates to success in other markets simultaneously.

Breaking into a new market is challenging, no matter the country. But the US market poses unique challenges of its own. From finding partners to marketing and product adaptation, there are several nuances that can make or break your company’s path to success.

Let’s look at how to enter the US market and the barriers to entry foreign Saas startups are likely to face along the way.

5 Challenges of US Market Business Expansion

1. Meeting local regulatory and compliance requirements

From local employment laws to business licensing requirements and tax obligations, expanding into new regions brings with it new compliance responsibilities. These regulatory and compliance requirements will undoubtedly increase in complexity as your startup’s footprint and workforce in the country expand. With joint ventures, meeting compliance requirements for foreign intermediaries is less challenging. However, for a small business, it’s a minefield.

It’s also important to understand that the US isn’t one large, homogenous market. It’s a patchwork of smaller local markets with different regulations, business cultures, and consumer tastes. That’s why you will need a localized market entry strategy for small businesses in each region. Speaking to a localization partner experienced with expansion to the US market is a good starting point.

2. An ultra-competitive market

Back at home, your company might be an industry leader, but expanding into the American market means competing with established brands that already have brand identification and established customer loyalties among American audiences. So yes, the US business environment presents foreign companies with fierce competition from other hungry startups as well as deeply entrenched brands. But, that doesn’t mean success is impossible.

Breaking into the market doesn’t necessarily require you to invent the wheel and bring an entirely new product to market. It does require, though, product differentiation and effective positioning which often require you to clearly communicate benefits to target consumers with the right localized marketing.

3. Have Proper Insurance

Expanding a business into the US market presents numerous challenges, and ensuring proper insurance is one of them. The US has a complex and diverse regulatory environment, and it’s essential to navigate the various insurance requirements. These can include liability insurance, workers’ compensation, and industry-specific policies. Inadequate or improper insurance can expose a company to financial risks, legal issues, and reputational damage. Therefore, thorough research and consultation with insurance professionals are crucial to determining the right coverage to protect against unexpected events, liabilities, and legal compliance in the ever-evolving landscape of the US market.

4. Cultural and Consumer Differences

Expanding a business into the US market entails grappling with substantial cultural and consumer diversity. The United States is a vast and multifaceted country, with consumers from various backgrounds, regions, and demographics. Understanding and adapting to these cultural nuances and consumer preferences is a formidable challenge. What works in one region may not resonate with consumers in another.

Effective market research and localization strategies are vital to address these disparities, ensuring that products, marketing, business activities, and customer service align with the specific needs and expectations of different segments of the US population. Failure to do so can result in missed opportunities and market underperformance.

5. Language barrier and understanding local business etiquette and culture

Nothing beats the personal touch in the world of business. Position your product or service offering in a way that is relatable to your audience. That means marketing your product or Saas in your audience’s native language and infusing your intellectual property and messaging that’s specific to their culture.

When dealing with international markets, adaptation is a natural part of doing business. Foreign tech startups should expect to navigate differences in business and cultural practices as they expand their commercial presence abroad.

The Solution: How Localization Fits into Your Market Entry Strategy

The success of market expansion hinges on localization. Expanding international business to a new target market that doesn’t share your language or culture can make connecting with audiences quite difficult. That said, a professional localization strategy makes the process of adapting to the US market much easier.

The world’s biggest brands all localize to meet market needs. This requires focusing on one target market, or one US region at a time, to scale sustainably. Localization helps you craft highly relevant customer experiences and adjust your products or services in a way that genuinely entices the local market. Put simply, you want to create relatable experiences for local audiences.

Localization is an essential investment for every startup to make to successfully do international trade and capture the US market.

Here’s a few tips to get started:

1. Conduct in-depth market research

Before entering a new market, you must first understand it. It’s crucial to learn about cultural differences that may impact consumer behavior and understand what matters to local consumers, including what they need and desire in a new product.

This step is also important to determine whether the US market is the right market for your company growth or startup in your current stage. A professional localization partner can offer support from the very beginning with localization consulting based on research and expertise. This can help startups that are new to the US market understand the best moves for them.

2. Consider American voice-overs

One of the most important mediums in marketing today is video. Translating your written content (including website, product, and marketing) into English is an important step in localizing international company for the US market if your original content is in a foreign language, but you shouldn’t ignore the importance of translated audio.

With social media platforms increasingly favoring video content over images, startups should use this to their advantage in their US expansion strategy. Depending on your target market, you may want to invest in localized voice actors to sound and feel American. Sounding local helps new companies build trust with the US market, and it’s also a great way to showcase Saas products that may be too complex to explain with images. Beyond translation and voice-overs, your entry strategy into new markets should focus on localizing the entire funnel so American customers can continue to have comfortable experiences when purchasing and using the product. Work with a localization partner that is well-equipped to support adapting your product for the American market.

3. Leverage technology to save time and money

As a foreign startup, entering the US market means the possibility of exponential growth in revenue and beyond. Nonetheless, it can be a daunting task to invest in. Without an experienced localization team, it will take a lot of trial and error to find the right translators, localization strategy, and translation management system (TMS). To avoid straining your team and budget, use a professional localization platform to gain access to time-saving technology, knowledge, and other resources.

Try to leverage machine translation (MT), translation memories (TM), and custom APIs for efficient localization workflows that will cut costs and delivery times. A localization partner can help you strike the right balance between translation technology and professional human translators. 

Dos & Don’ts

For companies and foreign investors seeking to export products or services to the US market, it’s important to consider the following guidelines:

Dos:

1. Embrace Cultural Openness: Be open to immersing yourself in a new culture and utilize the openness of the American people to expand your professional network.
2. Be Bold: Have the courage to take the leap into the US market, and dedicate ample time to understand its intricacies.
3. Strategic Positioning: Recognize the substantial competition and strategically position your offerings to stand out.

Don’ts:

1. Don’t Be Deterred: Don’t let legal or political events deter you, but ensure you thoroughly research and adhere to guidelines before exporting.
2. Avoid Short-Term Approaches: Understand that short-term product testing won’t suffice in the US market. It demands patience, substantial resources, and a long-term commitment.
3. Avoid Copy-Paste Solutions: Realize that replicating your existing business model may not work for the US; instead, be prepared to make necessary adjustments to align with the market’s unique demands. 

Go Global. Act Local.

With over 13 years of industry experience, BLEND provides the end-to-end localization services startups need to succeed in the US market. We understand the unique challenges startups face while breaking into the US market. That’s why we offer everything you need to get started for a winning market entry strategy, from localization consulting to a reliable translator network, TMS and CAT tool guidance and integrations, and a developed tech-stack. Ready to speak to your US audience with local credibility? Reach out to one of our experts to learn more

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