Entering the United Kingdom (UK) market can be challenging for businesses. Despite the UK economy’s strong demand for productivity-enhancing products and services, there are several obstacles that can prevent any business from the guarantee of success. The UK is a highly regulated country with many employment frameworks in place to ensure businesses are compliant with standards, employment laws and industry-specific guidelines. The UK business market is also highly competitive, with international businesses and domestic companies now vying for the market share. There is also the consideration of significant economic factors, such as Brexit and the slow economy caused by soaring interest rates and rising unemployment.
When a company wishes to enter the UK market, it is essential to have a cast-iron business plan and a careful go-to-market strategy. This allows you to remain focused on both short and long-term plans and budget accordingly. Due to a diverse UK market, your business strategy may look very different from that of another, especially considering the requirements of your company and the relevant industry.
The UK offers a myriad of exciting opportunities to new businesses. This article will help you devise a roadmap to overcome the obstacles of market entry and help you take advantage of the opportunities the UK market has to offer. We will comprehensively consider the importance of market research and marketing, how regulatory and legal frameworks can make or break your success, and how to ensure optimal financial hygiene.
Four out of five companies fail upon entering a new market. Unfortunately, if you’re a small or medium-sized enterprise (SME), the chances of failing are even higher. Typically, the reasons cited for failure include underestimating the target market, a lack of understanding of the target audience, and a shortage of a decent plan.
However, there is hope. With great planning and a thorough backup plan, you have a great chance of translating your incredible product(s) into a new, thriving market. It is crucial to be as thorough and meticulous as possible before entering the market. With fiercely driven competitors everywhere and so many variables dictating your success, your business cannot afford to take shortcuts. Any research you do must then be carefully weaved into a plan so that you can utilise the information accordingly.
Here are some ideas of where you can focus your research:
Conducting primary research is a great first step. You can gather data from your target consumers in the form of surveys, focus groups, and interviews. It is good to be as diverse as possible whilst ensuring you gather as much information as possible about your target audience. This research can lead to many strands of data, including demographic, psychographic and behavioural data, all of which can significantly help your business.
Even if you meticulously plan for your audience and you have a niche business idea, there is a high likelihood you will not be entering an empty market. The United Kingdom is a very competitive place to do business, with many excellent companies striving for success. It’s important to identify what makes your company different. You’ll also be able to gauge factors such as pricing and whether there is space for your product(s) in the market.
Cultural research is an often-overlooked part of a business’s due diligence. Something that may be acceptable business practice in one country may be very different from that of another. Understanding culture also ensures that the business is presenting itself to its new market in the best way it can. For example, if you think the McDonald’s Thailand menu is the same as the one you’d expect from the UK, think again. The menu has been carefully altered for the local culture, with chicken porridge on the breakfast menu and stir-fried beef and rice available all day. The same cultural adjustments apply to different overseas markets.
It is likely you may be aware of the UK’s economic climate prior to conducting research. However, it is still crucial to consider this, especially in light of Brexit. Prices have sharply increased since the UK left the European Union single market on New Year’s Day 2021, and Brexit is still having a significant impact on businesses. Product shortages, supply chain delays, and increased bureaucracy are just a few of the challenges.
London has long been one of the world’s most expensive cities. Rental costs in particular are very high, and this must be considered for any business planning market entry into the UK. However, as transport links to other UK cities have improved, businesses have enjoyed much less expensive costs away from the capital.
Regulatory and legal frameworks
The UK has long been a hotbed of bureaucracy and red tape. Many of the UK’s government-reporting authority bodies are in place to regulate businesses involved in sectors such as food and drink, forestry, sewerage, education, plus many more. Legalities and regulations have increased since the UK left the European Union single market. The exit added further complexity to an already complex regulatory framework. Any business looking to move into the UK market must fully comprehend the legal and regulatory procedures that govern the business sector. They must also comply with local laws and national standards, as well as any industry-specific specifications.
We will propose a few examples to get you started:
Decide your business model
There is a high likelihood you will already know which company you’ll be looking to register. Typically, this will be a new business or a UK establishment (a UK-based branch of a company you’ve already established overseas).
However, which of these categories you fall into could invoke a different registration process. If your UK company is an entirely different entity, you would typically register it as a private limited company (LTD). An LTD is a privately owned company with shares that are not traded publicly. The registration process for this is relatively quick. However, you would be required to provide a UK company address in order to complete registration. If you’re a director, you also need to provide a correspondence address for the public register – known as a “service address” and your home address – known as the “usual residential address.” If you wish to keep this from the public eye, you can apply for your residential address to be made private.
If you’re planning to move to the UK, you can also register your company as a sole trader or partnership. As a sole trader or partnership, you would have far more accountability for liabilities and company debts. You would not be liable to pay Corporation Tax, however, you would be required to submit an annual tax return statement. Not submitting your tax returns can be a significant financial risk, so it is important you conduct your research into the different options.
If you’re setting up an LTD company in the UK, it is a legal requirement to have a business bank account. Whilst a bank account is not a requirement if you’re registering as a sole trader or partnership, it is good practice to sign up for one. If not, you will find things can get very complicated very quickly, especially when it comes to filing tax returns!
Regardless of how you’re registering your company, it looks more professional to have an official business account associated with the company. This will also help you to make a favourable first impression with a client.
Choose your mode of entry
Over the last few years, the UK has seen a significant shift in remote working culture. According to the Office of National Statistics, 44% of UK workers currently work remotely in 2023. 16% of remote workers do so full-time, whilst 28% of hybrid workers split their working time between home and the office. With this in mind, you may wish to consider employee expectations when recruiting for vacancies. It is also important to consider whether the overheads of physical office space are an important expenditure for your business.
If you have the means to operate flexibly, perhaps you will consider a Virtual Office. For a small fee, you can hire a business address to use as your own without actually ever needing to use the space. For companies planning on full-time remote working, this may be an excellent option for such a small fee. This will give you a business address for VAT registration, and having a reputable address will build trust with customers.
As the UK’s tax, payments, and customs authority, you can be sure HMRC will be paying special attention to any new businesses. Make sure you do plenty of research in advance to ensure your business is registered correctly. The GOV.UK website contains all the information you may require, from Income Tax to VAT and National Insurance.
For more tailored overseas British business support, you may wish to consider joining the British Chamber of Commerce (BCC). For a small membership fee, you will have access to community networks, funding, and essential services such as HR, legal, and tax cover. There are 53 Chambers of Commerce based all over the UK, so you’ll be able to access the support wherever you are located.
GDPR and Data Protection
Get familiar with the Data Protection Act 2018, which is the UK’s implementation of the General Data Protection Regulation (GDPR). Since Brexit, the UK’s key principles, rights, and obligations regarding the use of personal data remain in place. However, there have been tweaks to the previous legal requirements, such as the rules on data transfers between the UK and the EEA.
When planning your market entry into the UK, it is vital to hire somebody who has a great understanding of GDPR processes. Breaching personal data can have serious consequences for a business, with maximum fines of €20 million or 4 percent of the business’s annual turnover. With hefty punishments, businesses cannot afford to make mistakes with people’s data.
If you possess personal data, you must also be aware of the Information Commissioner’s Office (ICO) fee. Every business or sole trader who holds personal information must pay a data protection fee to the ICO. There are some exceptions to this, but it’s best to check in advance.
If you plan to sell products on the European market, you must prove that the products meet applicable EU requirements. For products sold in the UK, this is done through UK Conformity Assessed (UKCA) marking, while CE marking is a requirement for products traded on the single market in the European Economic Area (EEA). The marking system ensures that products meet very high safety, health, and environmental standards.
Even if you have prior knowledge of the marking, it is best to seek advice due to recent changes in protocol. Since 2021, selling products in England, Wales, and Scotland requires UKCA marking rather than CE marking.
Business Development (Sales)
It is unlikely your business will make an impact on the UK market if you do not have an effective sales plan. A good sales plan will outline a sales target and implement strategies that will help you to achieve it. Thankfully, sales plans involve tried and tested techniques to help you and your team arrive at your goals together.
Define your target audience
Once you’ve researched your UK consumers and competitors, it is time to decide on your target audience. Determining your intended demographic will give you clarity when it comes to carrying out your marketing strategy.
Set goals, targets, and KPIs
Setting revenue or sales goals will define your business strategy. At the forefront of your business, your goal will be to ensure everybody within the business has clarity on the targets and the methods involved in helping to reach them. Aligning all of your departments on the same mission will significantly improve your chances of getting there.
It’s time to define the strategies and techniques that will ensure your product reaches enough consumers to be a success. Work out your priorities and timelines, and communicate critical milestones to your staff. Most businesses moving into the UK market are taking a risk, so you will have extra incentive to very clearly define what success means for your business – and the steps you’ll need to take to get there.
Once you’ve done your market research, established your business’s legal frameworks, and closed a few sales, the next step is to get your business known. Your marketing campaign will have a massive influence on your business performance.
Develop partnerships and networking
Get ahead of the curve by visiting the UK regularly to network and meet with potential clients. Alternatively, hire an employee based in the UK or work with an agent in your target market. The benefits of collaborating with local agents or UK-based partners cannot be understated. They would likely have a great understanding of the market and would be able to offer crucial guidance along the way. In addition to forging networks, some companies also decide to purchase an established business, which would give them extra insight and connections.
Find your USP
Once you’ve conducted research into your target market and competitors, you will likely have decided upon a Unique Selling Proposition (USP). This is important as it will define your business in a crowded market and help you stand out amongst the rest. Once established, you’ll need to communicate this effectively. This is where a digital marketing strategy becomes a great tool in your arsenal. Build brand awareness in your strategy by focusing on your USP and, if possible, investing heavily in digital marketing or PR.
Popular traditional marketing strategies involve print advertising, direct mail marketing, cold calling, and product placement. Traditional marketers are able to reach audiences who do not use digital technology. However, it can be significantly more expensive, and it’s also more challenging to gauge the impact of your marketing campaign. On an email campaign, for example, you can see exactly how many consumers have engaged with it (‘click rate’) and been influenced enough to make a purchase.
Digital marketing is more cost-effective and flexible than traditional marketing, with more content types available. You can advertise your business anywhere, from podcasts to email newsletters and social media, which allows you to more effectively reach your target audience. Digital marketing is a fast-growing medium. There are many different digital methods for targeting your audience such as pay-per-click (PPC), search engine optimisation (SEO), and social media demographics.
SEO is so important it deserves its own section. SEO is how most companies choose to grow their online presence. With SEO, you identify keywords that best describe your business and scatter them throughout your online presence so that people may easily reach you from search engines, such as Google. SEO marketing is a long-term project and is definitely not the best option for businesses looking for quick sales. However, if you have enough patience to consider the long-term, SEO could deliver the best yield of any marketing campaign.
PPC, or pay-per-click, is an online advertising approach where companies are charged each time a user clicks on one of their ads, mainly in search engines. These ads become visible when potential customers search online on Google with an intent to buy a product/service. For example, Google Ads is an extremely useful channel to drive qualified prospects to your site and increase your sales immediately.
E-commerce is a fantastic option for businesses looking to enter into the UK market. When listing your products on an online shop, you can ensure your business is always in the shop window without the need for the overheads of a physical space. It also offers a lot more flexibility for worldwide users, who can order at the touch of a button.
Any decent market entry plan must detail a communication strategy, with a budget set aside for PR and communication. It has been proven that a communication strategy gives businesses a much higher success rate, in turn building up trust and credibility for consumers. Involving a third party to endorse your products also creates a lot more consumer value than paid advertising.
As you’re planning to enter your business into the UK market, it is safe to assume you have considered the potential financial costs associated with such a move. Your funding for the market entry is crucial as it underpins all of the ideas we’ve discussed above. Entering an international market is not cheap especially not in one of the most expensive countries in the world. It is essential you’ve weighed up the true cost of such a move, both upfront and further down the line. It’s important also to consider several risks to your financial strategy.
UK Bookkeeping: the basics
Bookkeeping is the process of recording all the relevant transactions that a business conducts. While correct bookkeeping is a process that can be learned, it may be best to hire an accountant to ensure UK business financial procedures are followed correctly. Keeping track of all the general basics of bookkeeping, such as liabilities, sales, and net profit, will also save you a lot of time once the financial year comes to an end.
When moving into a new market, it is crucial to track payroll expenses as there may be associated costs that differ from other countries. It is important for businesses to keep track of payroll expenses to make sure they are meeting legal requirements. If you choose to pay payroll, you must tell HMRC and use their ‘payrolling benefits and expenses’ online service to declare this. Using a payroll management system also promotes transparency and builds trust among your employees. However, make sure to set this up early to ensure it runs smoothly.
VAT is a scary subject. However, providing your business does its homework and keeps stringent financial records, you can ensure you are compliant. To put it simply, if your business turnover exceeds £85,000 in a twelve-month period, you must register for VAT by the following month. Unfortunately, some businesses fall foul of VAT laws by not keeping track whenever their turnover exceeds this amount.
Budget for the unexpected
This could include the costs of recruitment, digital or physical infrastructure, consultation fees, acquiring equipment, and much more. There is also the prospect of additional unexpected costs such as patents, import tariffs, and insurance.
While following all of the above steps is no guarantee for success, doing so can certainly help to ensure you have all the preparation required to make the transition as easy as possible.
Successful market entry into the UK offers businesses a world of exciting opportunities. However, this success does not come easily, and companies must plan meticulously in all areas of their market entry strategy. Thorough market research is absolutely essential, as is ensuring your business complies with the UK’s rigorous legal and regulatory frameworks, especially with regard to HMRC, VAT, GDPR, and Data Protection. A crystal clear marketing campaign is crucial and this must tie in with a very effective and well thought out sales plan. Underpinning the whole strategy is your business’ approach to finance and how effectively you plan for the financial impact of your market entry.
Arm yourself with as much knowledge as possible, but also utilise the many resources available to support market entry. Don’t forget Brit Consulting is here to help you, and we can simplify your UK market entry, providing information and resources to help make the process as smooth as possible. Our team of experts uses proven methods to develop a successful strategy for your organisation. For more information, you can get in touch via our contact form.
Hi, I'm Krisz
I’m helping companies enter and expand their business in Britain