Case Studies: 3 ways to enter the USA market

Recently I met with 3 different manufacturers of solar panels.  All are from Spain, and all want to enter the USA market.  Their approaches are very different, and I think that their results will also be very different.  One will undoubtedly find success.  One will undoubtedly fail.  And one will probably limp along until they get either lucky or tired.  When you think of doing business in America, which approach will you use?

Approach #1: Certain Failure.

Company #1 is very excited about the opportunity to sell solar panels into the USA's fast-growing market.  As a first step, they contacted a sales consultant who lives in the USA and is also from Spain.  The sales consultant does not know much about the solar industry, but he is easy to communicate with, and works early morning hours so that the Spanish company can call him during their work day.  The consultant also agreed to work on commission only.

• Why it will fail:  The consultant is not working full days on the USA time zone, and so will not be giving USA prospects his full attention.  Because he is not supported by aggressive marketing, and not being paid, he will certainly have a difficult time finding and closing sales.  Within just a few months, I expect the consultant will fail, saying that he "needs a steady income" and cannot afford to wait for commissions only.

Approach #2:  Slow and Expensive Experiment. 

Company #2 has done a lot of research and set aggressive sales goals for its entry into the USA market.  It expects to capture significant market share with its low-cost products. The company is sending two high-level executives to live in the USA and build a team of sales people.  The budget for the effort is about $500,000/year.  This includes buying an office, hiring a secretary, and employing 4 sales people at $24,000 annual salary each.

• Why it will fail:  The company executives have never lived in America before.  While their English is passable, their understanding of the culture is poor.  They rush through business deals in an effort to make quota (instead of building relationships), and they are putting their dollars to use buying office space instead of supporting sales.  The salaries offered will not buy top-tier sales staff, and because the home office will do the marketing, they are going to miss the opportunity to get the right message to their USA buyers.  They will probably waste 2 years here before they either quit or hire a local executive to bail them out.

Approach #3:  Go Native, Go Fast.  

Company #3 knows that Americans like to buy from other Americans, and that the "made in the USA" label will differentiate them from all the other global competitors.  To take advantage of this, they have opened their own office in Puerto Rico, with a local manager and an American sales staff.  They are already building an assembly line in Puerto Rico that will qualify their products as Made In America, and their sales staff has already exhibited at the major industry trade shows. 

• Why they will win:  Company #3 knows that sales will take 6 to 18 months to start, and they are using that time to build a solid foundation for their company, product, and brand.  Their American staff are busy building relationships with buyers, and by the time the first sales come in the door, their factory should be fully operational.  They are prepared to invest in local people, local marketing, and even local manufacturing.  They will offer the USA market a product made with American quality plus the benefit of "European Design and Experience" -- a true value-add.

So, which company are you?  Remember:  Great returns require great investment.  But in the end, there is less business risk by building a truly local presence... and having the patience to see it through.

- David Worrell