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Top 3 tips to ensure your success when entering the UK market
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It’s a big world out there, and many startups are already thinking about how to expand their operations into the UK market. While this is an exciting prospect for any business, it also comes with its own set of challenges. In this article, we will discuss some of the common reasons why startups fail in the UK as well as tips on how you can avoid these pitfalls when entering this new market for your business.
Don’t underestimate the importance of good market research and planning — there are countless examples of companies that have failed because they were not prepared enough.
Best Buy’s entry into the UK market is a prime example of this. For those who don’t know the American giant, Best Buy is a multinational consumer electronics retailer headquartered in Richfield, Minnesota. The company had the ambition to expand to the UK and Europe but encountered some issues. They opened their first store in 2010 and closed all 11 stores just two years later in 2012. They failed because they didn’t understand why their US model might not work in the UK. The main issues stemmed from the size of their stores and their locations. In the UK, people generally prefer smaller shops in the city center rather than large warehouses outside of big cities. Another issue was the localization of marketing. American ads with American voices didn’t resonate with the UK audience.
Karhoo is another example of a company that failed. Karhoo was a platform originally created in the UK that allowed passengers to compare and book available cabs in their area by price, proximity and vehicle style. Their cause of failure was poor financial planning. The first issue was that they used a 10% commission business model instead of the 20%-25% that their main competitors (Uber) charged. This meant that they couldn’t generate enough margin. The second issue was that they offered promotion codes that allowed customers to get GBP 100 worth of free rides. This led to a loss of revenue. The third issue was that they didn’t track their finances properly and their management expenses were too high (for example, they travelled first class).
As these two examples illustrate, it is not uncommon to fail in the UK market due to mistakes that could have been anticipated. We have valuable tips to ensure that this does not happen to you.
Tip #1 — Assess the market
Assessing the market is key when trying to sell a new product or service. You need to make sure that there is actually a need for your product in the UK and that your potential customers will actually be interested in purchasing it.
To do this:
1) Research your potential customers to get an idea of who they are and how they will interact with your product. Where would they prefer to buy it? What’s their communication preference? What’s their lifestyle and how does your product fit into it? Do they need it?
2) Size the potential market share to see how much of the market you could potentially capture. Is it worth it, how does it compare to your costs? Some solutions, like SimilarWeb, offer market data to help you achieve this task.
3) Research the competitive landscape to see who your competitors are and what their strategies are.
– To gain a competitive edge, visit your competitor’s website and brick-and-mortar locations, pay attention to how they operate and what sets you apart.
– Your Unique Selling Proposition is what makes you stand out from them and displays why customers should choose you, this should be developed the most.
4) Identify what resources you need for success and if you have all of them. Do you have an organized team, reliable suppliers, enough finance, efficient IT system? If you don’t, you need to figure out why; what’s stopping you acquiring them and what will help you to progress past this barrier.
5) Consider the barriers to entry: what challenges do you face in terms of entering the market?
– Conduct a thorough PESTEL (political, economic, social, technological, legal, and environmental factors) analysis to gain an understanding of where the UK market is at the moment. Use this to adjust: does your business have any governmental restrictions that you need to account for, What are the social norms? Will exchange rates affect you negatively, how can you counteract that? Check your current operations against UK guidelines. (Can be found here: Business regulation: guidance and tools — GOV.UK (www.gov.uk))
– Be aware of any factors that could adversely impact your business or can be used in your favour.
– Conduct a SWOT analysis of your business to see possible points where the business is weak and could fail. Beware these areas may be targeted by competitors. It is important to have contingencies in place in case you are ever under threat. This also makes you actively look for opportunities.
By taking the time to familiarize yourself with these aspects, you can help ensure a smoother transition into the market. Detailed awareness is the first step in solving problems, and as they say, knowledge is power. It’s up to you to harness the power to eliminate the chances of failure upon entering the UK market.
Tip 2 — Test your solution with your audience
Next up on our list of tips is to test your solution with your audience. This is key to making sure your solution actually works for the people who will be using it.
One great way to get feedback is through customer research, either quantitative or qualitative. Quantitative research is all about collecting numerical data, while qualitative research focuses on obtaining non-numerical data (like peoples’ opinions and thoughts).
It is recommended that you validate your hypothesis through quantitative research and delve into the concepts through qualitative research in order to be successful.
Here are some tips for doing successful quantitative and qualitative research:
1) Define clear research goals.
– What are you aiming to find out? We often stray into doing unnecessary tasks which take up time and money due to unclear goals.
– Have a set of questions that your research is trying to answer, keep them handy at all times.
2) Make SMART objectives when planning the logistics of conducting research:
– They should be specific, measurable, achievable, realistic and in a set time frame.
– The market is everchanging and innovation is booming. Spending too much time or trying to obtain results beyond your capability will only delay your progress. You don’t want somebody getting there first.
3) Design a questionnaire or interview
– Make sure that it will elicit the most useful responses to your research questions. Decide which question types are most appropriate for you, whether its open-ended, closed, multiple choice, rating system or whatever. Consider what it’ll be like after receiving the result e.g. do you have the time or desire to read through detailed responses, do you have the right systems in place to tally multiple choice answers? Compare this to the type of answers your business needs. If there is a difference, you can always hire someone to help.
– Be sure to test it first with a handful of people to ensure that they will be able to understand and provide the desired information;
4) Create a screener that corresponds to your target audience. If you want to get accurate feedback, make sure to exclude any potential biases by not including people who are affiliated with the industry, marketing, or advertising (they could be spies!). This will ensure that you are hearing from those who are truly interested in your product or service, with no ulterior motive.
5) Consider using a professional panel to save time when recruiting respondents.
– SurveyMonkey is one such provider offering a global solution;
6) Administer your survey on a professional platform
– This is to demonstrate the high quality of your business as well as making it feel more trustworthy and legitimate to consumers.
– It also makes it easy for you to create and distribute
7) If you are deciding to hold interviews in person such as individual interviews (IDs), focus groups or sensory checks, ensure that the branding of the venue is appealing and the layout is effective;
– Clearly communicate the times, dates and location in advance
– Reminders a week before, a day before and the morning of
– Ensure that moderators are properly trained and will not influence respondents;
8) If you are conducting your interviews online, choose a platform that is user-friendly and allows you to record the meeting so you can come back to it later.
– A good option is Zoom. It is easy to use and well-known.
9) Once you have completed your interviews or surveys, offer an incentive to the respondents in the form of a gift card or cash payment. This will serve as a thank you for their time. Encourage them to follow up on the project.
– It is recommended that you provide gift cards instead of cash payments, as the latter can be difficult to manage. A sum of 30–50 pounds should be sufficient for an hour-long interview.
Once you’ve got answers from your audience and all the numerical & qualitative data, you must now adjust your business accordingly. Often at this stage, we let our preconceived judgement sway our thinking, but you must focus on the results. You must be willing to put your personal views aside, even if you disagree with the results. The consumer is who’s buying so make your offer exactly as they told you they want it.
Tip 3 Plan your market entry strategy
Think about how you’re going to market your product or solution, and what kind of route to market is most viable. You should also forecast your revenue and costs. Make a plan for the future, how your costs will grow as your business expands upon success in the UK. There are plenty of templates out there to help you with this process. Be sure to include past and predicted P&L statements in your forecast. If you’re starting a business from scratch with no history, don’t worry — there are ways to gather the data you need for making accurate forecasts, and you can always get external help (from people like us!). If you’re looking for ways to finance your business, there are a few UK websites that can give you information on loans and grants, such as: Finance and support for your business — GOV.UK (www.gov.uk)
As far as other resources go, you’ll want to consider what will best suit your business needs and development strategy. For getting leads from both traditional and social media sources, create a plan that takes advantage of all available platforms and their algorithm so your business can reach the consumers you want. Take into account your target market and which social media they use the most. Cultural norms are important throughout, make sure you know the UK’s habits that may affect the way you deliver and market your product or address your consumer.
If it all seems too intimidating, partnerships are always an option worth exploring. Or, a joint venture agreement could be a great way to get started. Especially if it’s with someone based in the market you are trying to enter.
Overall, if you have got all your bases covered you can transcend easily into your new market. A lot of the failures arise from the lack of research in one area or another but by following these tips, you can avoid this. A helpful thing to do is make a list of the possible things that could go wrong and determine a way to contradict them. Knowing what to expect means you won’t be caught off guard. If you are, don’t panic, it is impossible to plan for everything and you are more than capable of figuring it out along the way. Remember there is help available and if you’re truly passionate about your business you won’t throw in the towel at the first sign of distress! Keeping yourself organized will help. Make a report of all the information regarding your move to UK markets. Double, triple check it covers everything — imagine you’re going on holiday with your family, have you packed everything, checked the weather, know where you’re staying? In the same way, with care and attention, be certain you have checked the market, analyzed it, tested your target consumer, and created a clear market entry strategy.
If at any point you hit a roadblock or need help, just know we are here for you! Contact operviser at firstname.lastname@example.org with any questions.
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