Every new expansion of your business has the potential to die on the vine — especially when building a subsidiary within the international market. Nowhere is this more complex than in the United States, which is one of the most high-risk high-reward markets in the world. Challenges are a given in any expansion, but understanding the obstacles and ways to step around them is an excellent way to foster success.
Myriam Le Cannellier, Co-Founder and Director of DSML Executive Search, understands the many challenges of European subsidiaries expanding to the United States. She is an expert in recruiting for Europe subsidiaries in the USA from Chicago, and has spent more than 20 years assisting companies from Belgium, France, the UK, Germany, and more. Myriam had the opportunity to speak with three other panelists on the Pacific Tango Group Webinar Series about how these challenges can be managed and overcome, providing actionable advice and real-world tools to help international businesses succeed.
Problems And Solutions In Building A Subsidiary In The United States
European businesses expanding to the United States face four major challenges: business models, business plans, ROI generation, and executive search. We’ll explore each of these in detail below.
Copy-Pasting The Existing Business Model
Many businesses experiencing success in European markets believe that duplicating their business model into the US market is a surefire means of success. However, this is rarely the case. Considering America’s unique policies, laws, and dynamics, the European business’s value proposition cannot stay the same without minor adjustments.
“I think a lot of businesses look at the transactional process rather than the relational process,” says Fred Lee, CEO of KTON, LLC. “In the US, they really like to know about your product, service, and the business itself. Managers need to be more persevering and look at the US market as an initial investment.”
Myriam believes that flexibility is one of the most important elements of this. “What works everywhere else is probably not going to work the same way in the US,” she says. “The mere size, complexity, and go-to-market channels will significantly influence your business success. All of these things must be taken into account in order to succeed.”
Myriam warns that businesses are probably not going to make any money in the first two years. During that time, the subsidiary’s role is to take notes, adapt the product or service, and remain agile as the market changes. Be prepared for your target market to shift according to the culture, and for your initial price point to rise or fall with demand.
Creating And Presenting A Localized Business Plan
The US go-to-market plan must be localized. It’s important to allow your US-based team to implement their own advertising plan, website design, and marketing collateral to communicate directly with American culture. The US market is often resistant to anything that feels ‘off,’ which means parent offices must be willing to give their US branch more control over their localization process.
“Localization is more important than ever before,” says Zach Person, Founder of Borderless Business Solutions LLC. “Conversations about your localized go-to-market plan need to be had long before coming to the US.”
To allow your subsidiary to thrive in a new market, you’ll need to instill your parent company with a willingness to support the US team. Micromanagement mentalities should be reshaped into a talent-centric culture, allowing you to blend the mission of your home branch with the vision of your overseas subsidiary. In summary — be flexible, overtly willing to change course, and able to adapt your goals as you expand into the US market.
Getting A Return On Investment From Your US Subsidiary
Growing your business in the US is one thing, but making a profit from it is quite another. It may not be possible to maximize your income within the first few months, but if you’re willing to implement some practical steps, you can eventually see a measurable return that appeases your headquarter stakeholders.
- Granting patience to your new company. Treat your US outlet like a startup in order to manage your expectations.
- Understand that your subsidiary is an investment. You must be willing to lose some money in the beginning and manage your growing branch with humility.
- Expats should do their own research into the US market. Be sure to attend trade shows, look for new contacts, and otherwise consider ways to bridge your companies together.
- You can’t outsource the process. Empower the right people to do the job they need to do, and allow them to build the tools that will make your company money.
Above all, do what you can to combine local personnel with trained executives from your home countries. “The key to success is always in manpower,” says Kasia Lynch, Founder of Ikigai Connections. “Finding people who are local but also understand your culture is going to be a huge part of being successful.”
Finding, Hiring, And Managing The Right Talent Using Executive Search Recruitment
The first hires for your US expansion will make or break your subsidiary. The executives you choose will need to be more flexible, adaptable, and ‘rumble-tumble’ than those from your home country. Since there will be a lot of pivoting in the first few years, you will need a skilled c-suite right from the beginning.
However, this isn’t always well implemented. According to Myriam Le Cannellier, many companies struggle to put the right emphasis on their talent and attributes. “The most common mistake I’ve seen with subsidiaries in the US is to be overly obsessed with industry experience rather than relevance,” she says. “Candidates that don’t have any cross-cultural experience can be a recipe for disaster.”
The best way to ensure a proper hire for your company is to work alongside executive search firms in Boston and Chicago that have a firm grasp of what your organization needs to thrive.
“The winning strategy is to mix local talent with expat talent,” Myriam continues. “Combine the highest possible executive from the mother company with your team across the ocean. The US must be a priority for your company, and hiring a person in the US gives you new contacts and credibility in the market.”
Experts recommend finding talent that checks off all the boxes, especially if they have:
- The language ability
- Cultural awareness
- Emotional maturity
You will also need to formulate a specific US hiring process. “A practical thing that you can do to vet candidates occurs during the interview,” says Myriam. “Always ask, ‘what challenges do you anticipate in this role?’ If the candidate cannot answer or don’t think there will be any challenges, you can rule them out fairly quickly.”
Working with a company like DSML Executive Search can help with every step of this process.
Build Your Subsidiary Right With A CEO Executive Search Firm
Expanding your international business into the United States cannot and should not happen overnight. As you build new pathways and construct a business plan, you must be sure to focus on human resources first — especially in the first few hires. Partnering with the professionals at DSML can cultivate a higher chance of success throughout this process, and assist your brand as it steps into the US market.
DSML Executive Search has been recruiting for European companies in the USA from Chicago for more than 15 years. If you’re interested in learning more about our processes or discussing building your subsidiary within the US, contact us today.