A great location…

Identifying the optimal location for a business’s first steps on the US market, is a crucial decision in the business development process.

Earlier blogs (read location…location…location) described how foreign direct investors should search for the right mix of elements. Take into account where customers and competition, but also vendors are located; what incentives and support are offered; what caliber of employees can be found, without forgetting about time zones, cost of living, legislation, climate and connectivity.

This made Renuka Rayasam’s article on Atlanta a great read, defining it as a great location to work and live. We can confirm. She also points to the recent influx of major companies who have recognized this by relocating to the Big Peach. Daimler-Benz’s recent announcement attracting most of the headlines. We are certain more are to follow.

Read the article here: http://www.bbc.com/capital/story/20150331-beyond-the-worlds-busiest-airport

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It’s not the carpet, it’s the value proposition…

Successful entrepreneurs spend their scarce time developing a value proposition for their business, and are not mesmerized by the administrative side of bringing their business to the US.

The quagmire of administrative questions has bogged down numerous entrepreneurs with its lure of choosing: the nicest office building, the best CPA, the fastest internet connection and cheapest phone provider. Selecting the new phone system, printer and copier or even the first receptionist will not improve the odds of your business start in the US.

Instead you should spend your precious time finding out about your (potential) customers and their needs. Who are they, where are they, what do they buy today and why? What do they need that you can offer?

American businesses and consumers alike are very much into asking ’what’s in it for me?’ Why should I buy from you and not from my current vendor?

Have a crystal clear answer to that question, and do not get stuck with just thinking in product or service terms. Think total solution package (sales, customer support, technical support, price, marketing, supply chain,…) through the eyes of  the customer.

A sharp definition of what your business’s value proposition actually is, will set you not only apart from competition but on the right path towards US business success.

Then you will have plenty of time to select the carpet…

Is it a client or a customer…it is a ‘clustomer’!

A while ago I entered into a debate on the difference between a ‘customer’, a ‘client’ and a ‘consumer’… Was my debate partner selling to ‘clients’ or rather to ‘customers’?

Very quickly we agreed what a consumer was: the person at the end of the supply chain who actually consumed the product or the service…

It got a little trickier to define the difference between a client and a customer…

Webster says: ‘a client is a person who engages the professional advice or services of another’ and in the same breath confirms that ‘a customer is one that purchases a commodity or service’.

Well, that did not really help because my debate partner was actually selling marketing services to a niche market. It got even more confusing considering the fact – although they too offer a service – that doctors, dentists or psychiatrists do not have clients. They have patients. We quickly agreed that calling his clients/customers patients did not seem a good business idea.

We then decided to look at it from the perspective of the client/customer – would they have different expectations? Both buy a solution to their need and will become loyal if it fulfills or exceeds their expectations.

Again, this did not provide a differentiation, because both clients and customers tend to come back for more if they are happy. Although this is also dictated by the laws of offer and demand, because I cannot imagine Oliver Twist, whilst exclaiming ‘Please, sir, could I have some more…’ considered the food to exceed his expectations.

But we are digressing.

Clients, customers, consumers and patients alike will come back for more if you provide the right solution to their needs. So, have regular conversations with your clients, customers or consumers because their needs change, and find out how you are doing…

PS – we settled on calling my debate partner’s client/customers from now on ‘clustomers’. And he is still my client.

location…location…location…act 2

In this two-part article we are discussing the fact that many entrepreneurs do not use a logical process to decide where to locate their new business when arriving in the USA.

In the first act we looked at the importance of: time zones, customers and competition, vendors and transport, incentives and support, and the quality of employees.

Let’s move on to act 2 and discuss the second set of 5 elements in play…

6.    Cost of living

Can be very different from area to area, a nice suburb in a metro area with great schools will be much higher than a location 100 miles out in the country side. New York is on average double of Atlanta and Miami alike – play around with different calculators:

–       http://money.cnn.com/calculator/pf/cost-of-living/

–       http://www.bestplaces.net/col/

7.    Legislation

Employment laws and the impact of unions differ greatly from the North to the South. Many southern states have so-called ‘at will employment’ laws enabling employers to adjust their workforce quickly to new opportunities or an economic contraction.

8.    Climate

The North has winters with truly disruptive snow and ice, if road transport is important to you, it might not be the right location. Florida sees the odd hurricane that can actually close down an entire state, and the South can be very hot and humid in the summer… take your pick with a clear mind.

US climate

–       http://www.usclimatedata.com/

9.    Connectivity

Doing business in the US means flying. How easy is it to get to the airport? How often are flights delayed? How many direct flights to most (all) of your destinations are available from your airport of choice?

How is the commute to and from work – map it out for your team.

–       http://www.aci-na.org/content/airport-traffic-reports

10. Family – schools – education

As it is your decision where to settle, it is your responsibility to think through the impact of the relocation, for you and many more after you. It has been abundantly shown that if the other half of the couple is not happy with the relocation choice – be it employment, the schools, shopping, entertainment, sport, culture, neighborhood, friends, … it will become the venture’s highest hurdle.

Most importantly, know how to weigh, balance and interpret all these elements in play. Do not hesitate to define the unique mix that is important to your venture’s success. Developing a ‘weighted criteria decision matrix’ comparing all the options can be a very helpful tool to remain objective.

Also – do not underestimate the power of the southeast – read Phil’s latest article:

https://doing-business-in-usa.com/category/phils-posts

Where to start a Business in the US? One Example:

Location, location, location! As my colleague explains in his post, the approach to select a corporate site should be articulated. Let’s focus on the Southeast for example.

After defining the target markets, the marketing mix, the partner or target profile, along with other appropriate criteria for the operation like sourcing, financing and funding needs, economical impact and organizational implication, etc., the entrepreneur might have a good idea about the right place for successfully growing a venture.

Other factors that might play a role include infrastructure, access to talented resources, cost of living, economic growth rate, local market size, taxes, economic incentives, schools, prospective partner location, the cost of doing business relative to the U.S. average, and the time difference between the location and the home country.

An article written in French by journalist Jean-Pierre Gonguet describes the Southeast‘s vision and the strategy for becoming a global logistic platform and high-tech hub. “Atlanta veut se mettre à l’air et a l’eau.” Read more in La Tribune (If you do not read French and want more information, let’s have a conversation.) Gonguet was part of the delegation from France during the France-Atlanta 3rd edition last November.

Without being specific on a business model, focusing only on the economic environment makes sense. The Southeast—Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee— is the leading market for population and economic growth in the U.S.

The Southeast:

  • 7th largest economy (GDP) in the world at $3.15 trillion,
  •  home of 70 million people (+8 million in the last 10 years),
  • Atlanta airport is ranked # 1 in world in passenger volume and has 19 cargo-only carriers,
  • headquarters for 12 Fortune 500 and 15 Fortune 1000 in Metro Atlanta,
  • More than 80% of U.S. consumers can be reached from Atlanta in two flight hours or two truckload delivery days,
  • 40% of North American manufacturing and distribution locations are located within 800 kilometers of Atlanta,
  • Atlanta ranks # 2 among America’s most wired cities.

Cost of doing Business in teh US 001

“Source: KPMG’S 2010 Competitive Alternatives Study, Guide to international Business Location”

Despite the statistics, the best business location for a business model might be in San Francisco or in the Mid-West. This is perfectly fine! In other words, the best location for establishing a new venture is a complex decision indeed but key to successful operations.

location…location…location

That’s what a realtor will tell you when buying a home – it is not the house and its features but the location of your favorite piece of real estate that will determine its value.

Heeding this logic where should a new business in the US be located?

There are 3.8 million square miles (9.8m km2) to choose from…

Over the years COGNEGY has spoken and worked with many entrepreneurs who are faced with the very specific question where to start their new business. Surprisingly enough many of them do not pursue a rational process to reach such a decision. This article does not have the intention to promote either the ‘Big Apple’, ‘Big Peach’ or ‘Magic City’ – in fact we serve all three metro areas – but to provide a number of thought provokers leading to a well-founded business decision.

The East Coast offers many great choices, the question is: which one is right for you?

1. Time zones

Stay on the East Coast – a six-hour time difference is big a challenge enough. If the office closes at 5:00pm in Europe and the US starts at 8:30am – you only have 2.5 hours overlap. Move two time zones to the West and there is a mere 30 minutes left.

2. Customers and competition

This is the real question…where are your current customers and where are your prospects hiding. Also consider where your competition is located – you will want to hire (industry savvy) people without relocating them all across the US. It will be difficult to attract great employees if you are out there all on your own.

3. Vendors – transport

Where are your vendors based – having them drive out of their way to deliver your materials, components or supplies will drive up your costs unnecessarily. Also industry players tend to congregate in one geography, allowing negotiation for  better prices.

4. Incentives and support

Once decided on the larger geographical area it is time to talk to state representatives, county officials and local chambers alike and invite them to be creative with their entire incentive program to attract your business. Their enthusiasm will be directly proportional to the number of employees you plan to hire.

5. Quality of employees

Select a metro area if you want to attract the right caliber of executive and team. Not only for the quality of the schools for their kids, but also the quality of life. Blue-collar labor might be cheaper further away from a metro area, but you will struggle to find and retain the right caliber of management. The optimal solution will depend on your business. Do not hide out in the sticks.

We will look at 5 more elements in my next post. In the mean time, choose wisely, as the world famous Yogi Berra once said: “When you come to a fork in the road… Take it”.

Adjust to local market conditions to penetrate the market …

Learn more when Airbus Americas Chairman speaks at Georgia Tech on March 13.

By establishing a manufacturing presence in the U.S. today, Airbus also improves its chances of being selected in the future for U.S. defense contracts, according to business analysts. Read full article by Phil Bolton. Read more

The French American Chamber of Commerce organizes this event, and thanks to the Chamber, COGNEGY is a proud sponsor. Register here.

Strategy: The Airbus investment in the Southeast raises the region’s profile as a center for aerospace development, and suppliers have already moved to the area since the Airbus announcement about opening a facility in Mobile last year. Penetrating a new market by following the tail of one’s customers is a great way to mitigate the risks. Needless to say, it costs a lot less to retain a customer than acquire a new one.

“You can observe a lot by watching. “ Yogi Berra (Yogi was elected to the National Baseball Hall of Fame in 1972.)