America & Delaware: Realising the Potential

David Smallman, Global Advisor, Delaware Prosperity Partnership

Featuring David Smallman, Delaware Prosperity Partnership

David Smallman: The Expertise & Experience  

Putting it bluntly, David has been around the block (and I mean that in a nice way). Overall, David’s experience has seen him work in over 60 countries across 5 different continents. From early morning calls with Karachi and Dubai in the 70s, to living in San Antonio, Texas and France in the late 80s – early 90s. David has experienced international trade and economic development across five decades.  

This experience has led to David running his own business (Pathfinder Team Consulting), becoming an ambassador at the University of Southampton Business School and releasing a business handbook titled “Smallman - Making Sense of Business”.  

From a purely US point of view, David has filled corporate roles and state advisory positions in Mississippi, Louisiana, Texas, Oklahoma, Georgia and Delaware where he currently works for the Delaware Prosperity Partnership as their Global Advisor. 

So, after listening to David at a recent North East Chamber of Commerce event about UK-U.S. trade, it seemed only right to sit down and delve deeper into his experiences of the U.S. market and how UK companies can realise their U.S. potential.  

The “Special Relationship” 

It cannot be argued that the UK and the United State of America have a close long-standing relationship. We frequently hear about this relationship an awful lot, for instance Prime Minister Kier Starmer referred to the “special relationship” when recently congratulating President Donald Trump on his election victory.  

This relationship and shared history are evident in the everyday lives of ordinary people, and not only siloed to our national leaders. For instance, David explained that “a lot of ordinary Americans will bend over backwards because they like an English accent so much”. A good example is the UK streaming service BritBox, which is one of the most heavily subscribed in the U.S.  

However, from a business point of view, there is only so far a special relationship and a British accent can take you. Don’t be fooled into thinking that this relationship and familiarity provides UK businesses with easy access into the U.S. market. As David emphasises, this relationship does not give businesses the right to treat the U.S. market with any less respect or time than they would any other international market they are attempting to enter. Conducting proper research is still key!  

David was more than happy to share this and some other tips that all businesses should look to follow.  

Understanding the US Market 

One of the first things that David (and other US Market Entry experts) are quick to point out is that the U.S. should always be treated as 50 separate markets rather than simply the one.  

“The clue is in the name of the country, the United STATES of America. As a business you cannot simply assume it’s one marketplace...if you are going to do business in Utah, you’ll do it in a completely different way as you do in southern Florida.”  

David made the point that it is not simply the climate, landscape and people that makes each state different. States also differ when it comes to legislation, taxes and business start-up provisions.  

“Too many American firms look at Europe and think it’s one market which we know it is not. But equally, too many UK businesses look at the U.S. and make the same mistake.”  

Recognising these regional differences and subsequently finding the market that is right for you, is crucial for a successful U.S. entry. That is why market research was top on David’s list of steps that every business should take.

Conducting valuable market research  

Conducting market research in a country that is as large and diverse as America can be a daunting task however, as David emphasises, it is one that has to be done. Along with a number of other factors, your market research should always consider: 

• Economic Environment: Consider the economic conditions of each state, such as GDP growth, consumer spending trends, and general economic stability, as they can affect purchasing power and business success.  

• Cost of Doing Business: Evaluate costs, including property prices, staff, utilities, taxes, and any industry-specific regulations that might affect operational expenses. States vary in cost, and this can heavily impact your budget and profitability.  

• Labour Market: Assess the availability, skill level, and cost of local workforce for positions you’ll need. Some states offer skilled labour pools for certain industries, while others might require you to pay higher wages to attract talent.  

• State Incentives and Tax Breaks: Research state-specific tax incentives, grants, or funding programs that could benefit your business.  

• Legal and Regulatory Environment: Look into any state-specific regulations, including licensing requirements, product restrictions, or compliance rules that could impact how you operate.  

• Supply Chain and Distribution Channels: Evaluate the proximity to suppliers, distribution centres, and transportation infrastructure. This includes access to ports, highways, and shipping options, which can influence logistics costs and efficiency.  

• Customer Demographics: Identify the demographic characteristics (e.g., age, income, education) of your target market in each state. This helps in targeting your product effectively to where your ideal customers are.  

• Industry Clusters: Check if there are industry clusters related to your product, as these areas often have robust networks, resources, workforce and potential partnerships to support industry-specific businesses.  

• Digital and Technological Infrastructure: If your business relies on technology (e.g., for e-commerce or digital marketing), consider states with strong digital infrastructure and high rates of technology adoption.  

• Quality of Life and Brand Perception: Consider factors that could affect the brand's perception and your ability to attract talent, such as local quality of life. 

Once you’ve conducted your thorough research, David made it very clear what steps he believes you should be taking next.  

“Get on the plane. Once you’ve done your market research and you’re pretty sure you’ve highlighted where you’re going, get on the plane and don’t try doing it all from the UK”.  

As with any market, it is very difficult to make the right connections and fully evaluate the potential opportunities a market may hold for your business from the safety of your desk and office.  

When it comes to America, for some businesses their market research may narrow their list of potential locations down to a small handful. At this point a business should be looking to arrange a trip to each of these locations so they have a full understanding prior to selecting their final location.  

As part of your market research, and while you visit any potential location, David explains that there are at least a couple of organisations in particular who you should be looking to speak to. 

Economic Development Teams & Chambers of Commerce  

Firstly, it is important to stress the different attitude that the U.S., states and counties have to inward investment compared to the UK. In the U.S., significantly more time and resources are spent on not just helping their local businesses to export, but to also get the right businesses to set-up and establish in their region.  

David explained that this attitude centres around the belief held by a lot of people in America that business is a two-way street.  

“I’ve got companies in my community who want to talk to you, and you’ve got people in your community who want to talk to me. It’s a two-way street and both sides can benefit”. 

As such, in America, you will find that states have their own teams which are dedicated to business growth and inward investment. For example, it is this team in Delaware (the Delaware Prosperity Partnership) where David works as their Global Advisor.  

David and the team, like a lot of their counterparts based across different US States, provide various services all with the aim of helping your business have a successful market entry into their state/ county.  

“Get on the internet and find out who operates and who are the international staffers in each relevant economic development organisation. Find them, speak to them and then meet them face-to-face”.  

This two-way street ethos is not only words, but can also be evidenced in the work of the Delaware Prosperity Partnership (DPP). For example, in the week before I sat down to speak with David, he had been to the North East of England and the Port of Blyth to sign a Memorandum of Understanding between the port and the DPP. The CEO of the DPP, Kurt Foreman, explained how this MoU would benefit both parties:  

“Formalising our cross-Atlantic relationship will allow DPP to leverage the port’s considerable capabilities and experience and enhance our ability to assist companies…and, where possible, aid in creating more jobs and more revenue both here and overseas”. 

Additionally, another important contact David emphasised were the local Chambers of Commerce which, as he explained, can be incredibly important in some areas.  

“Depending on the state and area, the Chamber can be quite powerful and do a lot of economic development work”.  

By speaking to and arranging meetings with at least these two organisations, you will have made a strong start to any U.S. visit.  

Getting those first hires right 

Regardless of where you are looking to expand your business, you are going to need the right support bubble around you. This needs to have the necessary local expertise and knowledge to help your business flourish but, particularly in the early days, every business wants to make sure that every Pound (or Dollar) spent is wise and effective. 

When we speak to businesses, one of the first people they look to bring on-board when entering a new market is some form of distributor or agent. However, David explained how businesses need to be careful when looking to hire an agent for the American market.  

“Agents in the U.S. have almost the same rights as an employee in most states. So a UK business might think they are subcontracting somebody but be very careful to understand what the local government regulations are”.  

Alternatively, David says that some of your first and most important hires should be the same roles and individuals you look to hire first when setting up in any country: An accountant and a corporate lawyer.  

“Just the same as you would do here, you get a decent accountant to make sure that you are filling in all the paperwork and accounts properly. Then, to make sure your contracts are in order, you have yourself a lawyer”.  

These two roles are particularly important when it comes to finally deciding on a location for your U.S. branch/ entity and turning any potential incentives and benefits into a reality. As we’ve discussed in this and previous editions of Horizon, American states are open to offering financial and tax incentives to secure your business. The extent of these benefits will depend on the sector and size of your business as well as the extent of the positive impact you will have on local businesses and the economy. As this package can be so unique to your circumstances, it’s vital you have the right people in the room with you.  

“Once you’ve decided where you want to set up, you then need to sit down with the local economic development people, your local accountant and your local lawyer to thrash out what your package looks like”.  

Having the right budget  

It goes without saying that, for a business to have the best opportunity at successfully entering the American market, they need to have a sufficient budget.  

David made this point a few times during our conversation saying that businesses need to “set aside enough budget. Don’t assume you can do it on a shoestring”. When calculating how much of a budget you need, as a minimum a business should always consider:  

• Whether they need to obtain commercial support in conducting market research  

• Flight, travel and accommodation costs for visiting America  

• Costs of attending any exhibitions or membership groups that may benefit their market entry  

• Staff costs (accountant, lawyer, advertising agency, distributor etc)  

• Logistics and warehousing costs when selling goods  

• Cost of renting premises (if necessary) 

• Cost of completing, filing and registering any regulatory requirements  

Finally, any business targeting any new market needs to appreciate that, unless they are lucky enough to have a big client already lined up, the new market is not going to be paying for itself from day 1.  

America is no different in that a business needs to ensure that their UK trade is profitable to the point that it can support the U.S. market until that becomes profitable in itself. Reaching the potential does not just happen overnight. 

Delaware Water Gap, Delaware River, Delaware, U.S.A

Why Delaware?  

From the outside looking in, Delaware can  

seem a slightly odd place to establish yourself in America. After all, size-wise it is the second smallest state and ranks 45th in terms of population size. This is something I put directly to David who was more than happy to point out Delaware’s unique benefits.  

Judicial Independence 

In a system that is unfamiliar to us in the UK, the vast majority of the judiciary in the U.S. (from the 94 District Courts right up to the US Supreme Court) are politically appointed. For example, during his last term in office, President Trump appointed three Judges to the US Supreme Court. With political appointments comes political bias and pressure which can impact a Court’s ruling.  

However, Delaware is unique in that the judges that sit on its Chancery Court are not politically appointed. Instead, judges are selected purely on their experience and knowledge. The freedom of not being a political appointment allows Judges to pass rulings purely on the merit of the case and the law.  

“If you’re going to form a U.S. corporation, there’s only one state to do it in. If you’re going to consider jurisprudence, rule of law and making sure you’re protected as a company. 

“That is the reason why 62% of the Fortune 500 companies in the world are registered in Delaware”.  

A great example of the significant impact Delaware’s judiciary can have in determining where a company registers and trade can be found in one of the biggest and high-profile corporate battles of the last decade. In 2022, Twitter sued Elon Musk in Delaware’s Court of Chancery in an effort to force him to complete the $44bn takeover of the company. This was heard in Delaware due to both parties being registered Delaware corporations.  

Even if you set up outside Delaware, do not be surprised to see contracts that include clauses that any disputes will be heard by a Delaware Chancery Court Judge. 

Location, Location, Location 

As demonstrated by the hit Channel 4 show, location really can be key. It is no different when thinking about Delaware.  

Delaware is located on the North East coastline and is the central point along what is known as the New York City to Washington D.C. corridor which makes up the largest consumer market in the US.  

For people unfamiliar with the region, this corridor also includes globally renowned cities such as Baltimore and Philadelphia. Using the train you could do a morning meeting in New York or D.C. and still be back in Delaware by lunch. Even by road, companies within Delaware can reach nearly 64 million consumers within a five-hour drive.  

“The reason why a lot of banks have office facilities in Wilmington, Delaware rather than New York is because a) it’s cheaper and b) they’re half-way to Washington if they need to talk to anybody in federal government”.  

Also, the benefit of Delaware’s location on the east coast cannot be overstated not only for UK shipping and logistics, but also for time difference purposes.  

Delaware sits on Eastern Standard Time which is currently five hours behind us in the UK. In comparison, Houston, Texas sits on Central Standard Time (- 6hrs) and Sacramento, California falls on Pacific Standard Time (-7hrs).  

From speaking to David, it is clear that time differences can be not only a challenge for UK businesses to manage, but also for their American counterparts “some Americans frequently forget that the rest of world isn’t on the same time zone as they are.”  

The 7-hour time difference between the UK and Pacific Standard Time can leave the window of opportunity for UK-Californian colleagues to talk within standard business hours as incredibly small. The 5-hour difference with Delaware is more beneficial for a productive and collaborative working experience while maintaining a regular work-life balance. 

The Biggest Opportunities 

Delaware is split into only three counties named, from north to south, New Castle, Kent and Sussex. Despite having the fewest number of counties of any US state, Delaware still provides opportunities for a number of different sectors.  

The southern county of Sussex holds fantastic opportunities for agricultural businesses. While New Castle (and in particular the city of Wilmington) is home to urban businesses who take advantage of the transport links created by the D.C. - New York corridor.  

In particular, Delaware offers opportunities for:  

• Science & Technology: Delaware’s STEM-based industries and biotech companies are among the strongest in the U.S. and support a variety of end use markets including pharmaceuticals, industrial and agricultural chemicals, medical devices and computer services.  

• Fintech, Business & Financial Services: Financial services is Delaware’s largest traded sector, and their trusted and sophisticated professional and business services firms have made Delaware an ideal corporate location. 

• Food & Agriculture: Delaware is ranked No.1 in the whole of America for agriculture value sold per acre. Food production is big business in Delaware and, due to their science and technology strengths, they find themselves on the cutting-edge of some of the most modern advances in food and agriculture 

• Manufacturing & Logistics: The benefits of Delaware’s location have already been well discussed. Due to a robust infrastructure, businesses can take advantage of not only Delaware’s location, but also any mode of transportation.  

• Education & Healthcare: Delaware is one of the America’s prominent leaders in knowledge creation and R&D. Key partnership between businesses and academic institutions, private and public partners has allowed Delaware to drive innovation that has global benefits.  

The Delaware Prosperity Partnership  

After doing such a great job of explaining the benefits of setting up in Delaware, we had to ask David about the DPP. Ultimately he is their Global Advisor and the first point of call for any UK business interested in setting up in Delaware.  

Putting it simply the DPP is “all about providing you with a landing point to enter the U.S. marketplace. It’s all about giving you a bridge into the U.S. and helping you with the details of entry that are critical to the success of your business”.  

From everything David explained about the DPP, there were arguably three key areas where a business could take the greatest advantage.  

1) Research Support on-hand  

Like other states, the DPP has their own research team. These can be vital in helping any business as it will supplement their own research and provide additional guidance and information which could help any business, including contacts of potential business opportunities. As David described, this process alone can “save a business eons of time”.  

2) Benefit from DPP’s contacts  

Whether the contacts come from their research support or through their team’s experience and knowledge, having access to contacts who you know have been sourced by experienced individuals on the ground in Delaware can be invaluable.  

3) Free office space to get you started  

Through the DPP, a business can access hot-desk space for up to 6-months free of charge.  

This allows a business to occupy and work from Delaware whilst they finalise their research to ensure that it is the right location for their business. Having this opportunity and time (for no additional cost) is invaluable for any business.  

To maximise this opportunity, David was quick to point out the need to make one simple change; purchase US business cards.  

The incubator service allows businesses to obtain business cards that have got a US address on. So “when you go to meet  

potential customers, you can say here is my local 302 telephone number. It’s the subliminal message that you’ve handed them a U.S., local business card”.  

Conclusion  

Saying that the U.S. is a large country is one of the biggest understatements you can make. The size alone can prove too much for some as they simply get lost when thinking about the question “Where do I even start?”  

However the process you follow, though maybe on a larger scale, is no different to the process you should be following when trying to enter any market. Conducting effective and comprehensive market research must be the starting point!  

Once you’ve narrowed your field of possible locations, there is no substitute for getting on a plane and visiting. Whether this be through an organised trade mission or independently, it’s imperative that you make the effort but don’t think of your U.S. adventure as simply you against the world. There are individuals, bodies and organisations out there to help you succeed and David and the Delaware Prosperity Partnership sum this up better than anyone else.  

“We’re always willing to help”  

For obvious reasons, cracking the American market is an ambition for so many businesses across the globe. To write this article, I only sat down with David for an hour. If I tried to cover all of David’s 55 years of experience, I’d be able to write a book (which I suppose he has beaten us to and already done). Imagine then, through David and the Delaware Prosperity Partnership, how they can help make this ambition a reality.