Jeff came into Cornerstone as the region head for the Americas in 2021. Currently residing in Tennessee, Jeff is a key figure in the growth of Cornerstone’s client base in the US. We chat with him about the expansion of US businesses into the EU:
What does your day-to-day look like? Give us a walkthrough of a day in the life of Jeff and working with Cornerstone.
It’s currently a lot of strategizing and figuring out how to find new clients and what are the best services we can provide at a good and valuable range. We are figuring out how SMEs can realise the value of our services and how to convince them to make the investment to engage with us so that we can help them. Periodically, I have meetings and calls with the leadership team in Europe to determine how we can service our clients optimally and efficiently.
You’re from California but you’re now in Tennessee. What made you want to move there?
My old company was one of the main reasons why I moved here but I’ve personally been wanting to leave California for quite some time. Culturally, it’s changed a lot and it just wasn’t a fit for me. People are so busy, and they don’t have time to enjoy the personal side of life. I lived within a ten-minute bike ride from some really good California wineries, and I was a member of a couple of them and as a member, you get free tastings. I would send a text to a couple of friends on a Friday afternoon, inviting them to join me for free wine and I would be lucky if even one of them replied to say “sorry, I can’t make it” – and these were friends that I’ve known for more than 25 years. Everyone needs a high paying job to afford the lifestyle there, which probably means more responsibility and more work. Nicer and more affordable homes are also probably never next door to your office, so you have to commute an hour each way every day to get to work. I definitely have a lot more of a work-life balance now that I live and work in Tennessee.
Why should US companies consider expanding their business into the EU?
Europe is the second largest economy in the world so, it makes sense that US companies look to the EU as their first point of expansion. In most, if not all countries within Europe, English is a second language – so there’s commonality there and they have buying power. In the current marketplace, there’s probably some additional complexities with supply chain issues, logistics, taxation and making sure they do it right. But the positive thing about that is people are doing more planning before actually launching their expansion. They look for some guidance to help them determine what the best course of action should be. Also, people who started or have been selling goods and services in Europe from the US are happy to deal with continued change and continued environmental impacts on the supply chain side.
From your experience and expertise, what would you say are the biggest challenges businesses face when expanding internationally?
US entrepreneurs tend to oversimplify the European market. The process of establishing a business in the EU is not like The States at all. There are different languages, there are more complicated taxation systems… problems they could face are the amount of overhead and the amount of effort it requires to monitor and permit VAT in every country. Also, American marketing works differently to that of the EU. American companies have theses sophisticated methods of trying to get people to buy their products and that doesn’t always work in the EU. In some cases, you can’t legally apply American marketing strategies in Europe.
My advice is to make sure you understand the tax and legal issues before you start launching the distribution of your products in Europe. It’s also not very easy to get things up and running from a language perspective especially in terms of customer service. Another big issue is handling product returns which can be very costly – consumer law in the EU is completely different to that of The States. It's a lot more complicated than people think.
What kind of businesses are entering the EU?
Medical devices, healthcare business, direct to consumer electronics… it’s about looking at where the greatest demand is currently. It ebbs and flows with global demand. There are some businesses within the US that are doing great and there are others that are doing very badly, and it depends on the sector. Travel and hospitality are doing very poorly so they wouldn’t be looking to expand but food and beverage sectors are doing very well. People are staying at home and they’re buying more at the grocery store and they’re going out to eat less so that’s changing things. The businesses in the industries that have been hit hard by the pandemic that have better margins or that managed their capital more wisely are probably looking at opportunities to takeover market share as a result of some loss of competition.
What opportunities do you see for EU companies entering the US market?
Businesses setting up within the EU need to go through a multitude of processes to launch a product. This process includes ensuring proper licensing, the right packaging, product trials, there are legal issues, compliance issues, and the list goes on. Unfortunately, it’s often that during this process, after three or four years, not a single sale is made. In the US market however, because it is a capitalist market, speed is key – they like for companies to start selling their products as quickly as possible. Along the way, the FDA or other regulatory agencies will come along to make improvements to the products but generally, the market entails a continual improvement process as opposed to draining a company of all their resources from the get-go which is what happens in the EU. If these companies get through the initial setting up period in the EU, then it almost turns into a game of survival of the fittest. It’s a completely different ball game in The US.
How do you think Brexit has affected US business wishing to expand into the EU?
In the past, US businesses expanded into the UK because it was an easy place for them to access the EU market – culture-wise, language-wise, legally, everything was easier. Since Brexit, US businesses that have set up distribution centres in the UK have naturally suffered the consequences. However, because The UK is a big European market, many of these US companies have decided to split their distribution centres to have one in the UK and the other in an EU country – the closest being The Netherlands and the first place they often think of setting up shop.