European startups in AmericaThis guest post is written by Jennifer Vessels, CEO of Next Step, a consultancy for international companies expanding into the US.

Over the past five years, many northern European companies have eyed the US market as an opportunity for sales expansion and profitability. However according to recent statistics from the National Venture Capital Association, less than five percent of these companies are successful in gaining revenues and market share within their first year. Interestingly, an even smaller percentage continue to pursue US business after year one.

Despite this, now is the time to act. As the US economy is recovering from the recession, there is an openness to new ideas and funds available in the US market today. To take advantage of these opportunities, avoid these top five mistakes of US market entry:

1. Underestimating the requirements for success

In Next Step’s experience the amount of time from initial market entry to revenue in the US is a minimum of 12 -18 months. There are techniques you can use to minimize this. But any executive team considering the US market should be prepared for time and financial investments for 18 months prior to generating a steady revenue stream.

2. Lack of focus on ideal market segment

The US is a very large country with many different demographic market segments and areas. For success, it is important that the European company identify one to three key market segments either by industry, geography, or other demographic in which its products and services can bring the greatest value. After gaining market success and penetration in one area, this success can be replicated to new US markets efficiently and profitably.

3. Not having a compelling value proposition

While there is an openness to new ideas and funding available for strategic purchases, US business decision-makers and consumers today are highly attuned to “schemes,” “me too products,” and other offerings that meet only a portion of their needs. To gain customers, revenues and market traction, your company or product must have a clear, unique, and compelling value proposition.

All communications to the market (through marketing promotions, sales activities and all customer interactions) must clearly state and demonstrate how the product or service will deliver real value in financial, functional, and emotional terms to the buyer/customer.

4. Going it alone without fully leveraging US partners and alliances

While you may have great resources for growth in the European market, US buying patterns, legalities, and modes of doing business are quite different from those in Northern Europe.

To speed penetration in the US market, successful international companies seek and leverage partnerships or alliances with US service providers, sales channels, and customers. Individuals in these organizations know the US market dynamics, understand the buying criteria and decision making processes, and often have the networks to provide faster access to prospects, customers, investors, or other valued market partners.

5. Ineffective sales execution

Many unsuccessful companies had a great business plan, clear market focus and value proposition, and good supporting partners but never succeeded in closing a steady stream of revenue from a diverse customer base. The majority of these failures can be attributed to ineffective sales execution.

Sales execution issues often arise due to ineffective choice of sales channel or team (i.e. using inside sales or a hired “sales rep” when the target customer prefers to buy online or through known distributors or partners) or through lack of a clear, effective sales process able to identify, qualify, and develop ideal target customers.

As the US economy is recovering, Northern European companies have a great opportunity to plan and execute their international expansion into select segments of the US market. Through awareness of these common mistakes, and by making plans and developing the relationships required to overcome these obstacles, savvy business executives and entrepreneurs can leverage the opportunities today to develop a steady US revenue stream within 18 months.

This post comes to us via our European syndication partner VentureVillage.

[Top image credit:  Lobke Peers/Shutterstock]

This story originally appeared on VentureVillage. Copyright 2012