London is a strong brand that will elevate the value of your business, but the UK market is one of the toughest to sell to in the world, due to its quintessential characteristics such as risk-aversion, safety, security and stability.
Over the last 4 years, I have met well above 100 entrepreneurs that would like to set up and grow a business here in the UK, and most often, in London. Naturally, as they evaluate if this is a good decision, or not, they start by asking if London is a good startup hub, and what the ecosystem is like. We have attempted to give the most comprehensive answer possible to this question in our London Startup Ecosystem Ultimate Report – which has been red by 12,200 people since it was published. The conclusion of that report was, yes, London is indeed a good place to build a business.
Being in London as a founder gives you access to more talent, more funding, better coworking spaces, events, mentors and more. But, this is not to say London is a great market for early-level companies with a lot of enthusiasm and a little history.
This mainly comes down to how the residents of the UK make decisions. Having had more than a few sales conversations, my experience is that B2B sales – selling to a company, and B2C sales – selling to a person each need their own chapters.
B2B Selling in The UK
To understand how a population settles in any given geography, your best bet is to look at the source of water. Water gives life to people, money gives life to businesses. So to understand how the business landscape (and so the business habits and decisions) is shaped, you have to look at how money moves. Specifically, look upstream, how the money flows into the economy.
A few years back, I met a gentleman named Carl, with whom I was sharing a table at J.J. Fox, a great cigar club in London. We got around to chatting about international norms of doing business. He learned I grew up in İstanbul, and shared a few of his thoughts, that really stuck with me. “Every city has a stereotypical business persona, for example, İstanbul is a city of merchants,” he said. Which is true, as it was a port city, at the center of the ancient Silk Road.
The type of trade that is popular in the city, shapes people’s characters, in turn they shape the new generation and so on, weaving a fabric of patterns to how people behave in most business (and other life) settings.
London is a city of bankers. In many forms, London is also the birthplace of the modern banking. Not the derivative, speculative kind, but the stable, secure and trustworthy kind. This is of course not exactly accurate today, but it remained so for a long enough time to create a patterns of behaviour that permeates how B2B conversations take place.
Your odds of walking away with a sale from a B2B sales conversation with a national brand, a multinational enterprise, or a quintessentially British small business; is directly in correlation with how in line you are with the signals of stability, security, trust. So having made a few successful sales in the US or in Germany for example, really strengthens your hand. Of course, the best is having had a few strong clients in the UK.
Now startups are the opposite of this. They are risky. Their selling point is high risk – high return. Perhaps the change within a company that comes from awarding a contract to a startup will create a 10x boost to productivity or sales.
That’s why B2B selling as a startup, especially if you are a migrant founder, without those contacts from Eton and Oxbridge is extremely difficult. You have a better chance of selling internationally as a brand based in London, and once you have the proof, this is the last castle to conquer.
B2C Selling in The UK
For such a long period of time, as a founder and an individual who likes rational decision making, I have made the mistake of thinking buying decisions are rational. They are not. The sooner you realise this, the further you will go. People make at least more than half of their buying decisions as a result of an emotional process that ends up triggering their dopamine response. Dopamine motivates to take action, and they make a purchase.
This quality also makes B2C selling a more universal challenge. Although there are differences, the structure of a B2C sales funnel and/or a sales argument shares a lot of similarities in Spain, Italy, Canada, Philippines or The UK.
The UK consumer is health and well-being conscious, cares about environment and waste (despite UK being the leader in plastic waste and shipping their waste to Turkey), loves spending on items that have to with home building, hobbies, holidays and leisure. The amount of disposable income is also high.
But here is the thing, for the tech savvy, digitally aware founder, building a digital sales funnel is the way to go, rather than investing in a brick & mortar shop.This means there is even more opportunity internationally. Why not sell worldwide?
In my experience, as a result of all these variables, the smartest founders build a business that is “based in London” (which gives credibility to the brand internationally) but sells a B2C product worldwide. They then use this leverage to build an even stronger brand that grows in the UK market, too.