Commercial due diligence in the United Kingdom

If you are going to invest in a company with international expansion plans, you want to make sure that their product or service has good chances of being successful in the countries where you have ambitions.

This of course is also important for the United Kingdom. Only with the right knowledge about demand, competition and regulations it is wise to invest in market entry.
Business people with handshake

Business opportunities in the United Kingdom

The United Kingdom (UK) remains one of the most attractive markets in Europe due to its strong economy, established infrastructure, and business-friendly environment. Despite challenges like Brexit, the UK offers significant opportunities for international businesses.

Key Market Numbers

The UK’s economy and population provide a strong foundation for various industries. Here are the key statistics:

  • Population: Approximately 67 million (2023).
  • GDP per capita: Around $46,000 USD (2023), reflecting high consumer purchasing power.
  • Urbanization: About 84% of the population lives in urban areas, with London, Manchester, and Birmingham being key economic hubs.
  • Economic Structure: Services account for around 79% of GDP, with strong sectors like finance, technology, and healthcare.
  • Ageing Population: Yes, around 19% of the population is aged 65 or older, increasing demand for healthcare, financial planning, and senior-focused products.

Language and Documentation

Operating in the UK is relatively straightforward for English-speaking businesses, but localization can still enhance success.

  • Official Language: English is the official language and universally used in business, education, and government.
  • Language Considerations: Standard British English is preferred for marketing and documentation. Businesses should avoid American English spellings or phrasing unless targeting specific demographics.
  • Packaging and Documentation: Compliance with UK labeling laws is critical, particularly in industries like food, pharmaceuticals, and consumer goods. Packaging must include details like ingredients, measurements in metric units, and safety warnings.

Consumer and B2B Buying Behavior

The UK’s consumer and business markets are shaped by trust, quality expectations, and a growing focus on sustainability.

  • Consumer Behavior: UK consumers value quality, brand reputation, and transparency. Sustainability and eco-friendly products are increasingly important. Online shopping accounts for around 27% of retail sales (2023), with platforms like Amazon UK, ASOS, and Tesco dominating the market.
  • B2B Buying Behavior: UK businesses prioritize efficiency, professionalism, and cost-effectiveness. Relationships and networking are important, particularly in industries like finance and manufacturing.
  • Online Presence: A strong digital presence, including localized websites and social media activity, is crucial. Platforms like LinkedIn are widely used for B2B networking, while Instagram and Facebook are popular for B2C engagement.

Market Challenges and Opportunities

The UK presents opportunities but also challenges due to its regulatory landscape and post-Brexit changes.

  • Products/Services that May Struggle: Items with non-standard specifications or those that fail to meet UK regulations may face difficulties. Price-sensitive products can struggle to compete with established brands in the market.
  • Test Market Potential: The UK is an excellent test market for English-speaking regions due to its cultural influence and diverse consumer base. Success here can often be replicated in other Western markets.
  • Regulatory Environment: Post-Brexit, businesses must comply with UK-specific regulations, which may differ from EU standards. This includes customs requirements, labeling rules, and product certifications. Engaging local legal and compliance experts is highly recommended.

Comparing performance in existing markets

If the company the we are assessing already has sales in different countries, you can determine distributor performance or sales staff performance. 

One do this by correcting the actual turnover with data about:

  • the buying power in the market;
  • the geographical reach of the distributor or sales team;
  • the competition intensity;
  • the number of years active in the market.

Combining the data of the various countries over time leads to a growth curve where overperformers and underperformers can be easily identified.

You can then do selective interviews what causes any underperformance, and you can take corrective measures.

A curve like this also helps to estimate the potential in a new market. 

Turnover growth curve
Share of wallet data comparison

Before you focus only on the United Kingdom

Please note that there are many countries in the world and the biggest ones or the ones nearby are not automatically the best choice. It all depends of the market growth, the competition and the barriers for entry. 

Therefore we would advise you to make a short-list of at least three, but preferably five potential new markets and compare them against the same criteria.