The United States is the world’s largest recipient of foreign direct investment, with approximately $336 billion in inflows into the United States by foreign corporations in 2021. Every year, hundreds of companies from around the globe choose the United States as the ideal place for expanding their business. The United States is well known for its large and dynamic consumer market, a predictable and transparent justice system, highly developed infrastructure, a productive workforce, and an innovative business culture.
Thus, if you are considering a first-time expansion into the United States, or a continued expansion, you are in good company. However, even the best devised plans and strategies need to be tweaked to ensure their success. Below are some tips and strategies that I have seen work over the last 20 years in all varieties of industries and investment types. In this 2-part article, we will cover the following recommendations:
- Put a “Local Face” to Your Business
- Invest in Top Accountants, Lawyers, and Site Selectors in BOTH Countries
- Start Slow and Grow in Stages – Don’t Rush to Incorporate
- Do Your Homework: Keep Abreast of Differing Standards and Regulations
- Location, Location, Location
- Seek the Assistance of Key Stakeholders and Government Resources
1. Put a “Local Face” to Your Business
As a rule of thumb, people tend to buy from those that they trust, that they know or have a certain degree of familiarity with. We tend to gravitate to the familiar and therefore it is extremely helpful when opening a subsidiary in a foreign market to make every effort to have your business blend with the local consumer culture and business environment as much as possible. While you may be proud of your roots, it is more important to tailor to your new local clients.
A localized presence does not only mean a local address, but a local way of doing things that will speak to the local population. You want to make sure that your business is adapted to the business community’s look and feel. A few ways to accomplish this are:
- Hire local management so they can help you revise your business expansion plans to ensure that you are taking into account local daily business practices.
- Hire local professionals in marketing and advertising, not just to translate your sales materials, but to revise your entire marketing and sales campaigns and make you aware of any faux-pas and pitfalls.
- Hire locals in key positions in management and sales so that their network becomes your network. One of the most important short-term objectives of expanding into new markets is not only to keep risks low, but to be able to get sales revenues rolling in as quickly as possible.
In order to gain the quickest momentum possible, hire local sales professionals as these will have established networks necessary to ensure that you can quickly get your sales off the ground. Quickly creating a network in the foreign market will help make or break your business during the very first months as you try to integrate yourself in a new country.
2. Invest in Top Accountants and Lawyers in BOTH Countries, and Site Selectors
Do not underestimate or undervalue the importance of having good advice, particularly as you try to expand internationally. You should imperatively get sound professional advice in both countries – your home market and your chosen expansion market. It is not sufficient to have tax and legal professionals in your home market with knowledge of your destination market as even the smallest change to laws, standards, regulations, and nuances can greatly affect your plans. Moreover, local professionals mostly likely have a greater pulse on the business regulatory environment. Therefore, spend the extra money and hire accountants and lawyers in both countries to get the best, most well rounded, sound advice possible.
Lastly, call on professionals such as economic developers and site selectors that can help you ensure a successful business expansion. These businesses specialize in helping companies expand into foreign markets. Running a business is already a full-time, complex job, so it would be extremely beneficial for you to hire the right professionals that can help you achieve your dreams faster and in the most efficient way possible. These professionals have seen what works and what doesn’t time and again. They can help you save precious time and money so you can get it right the first time.
3. Start Slow and Grow in Stages – Don’t Rush to Incorporate
Very often businesses are eager to incorporate without much forethought and get down to business. I strongly discourage this method as it may leave you open to needless litigation risks and put your corporate directors, and company at home, at risk. Moreover, it may not be the most beneficial thing to do revenue-wise. This is particularly true when investing in the United States due to the fact that it is a very litigious country. You will want to minimize any risks of getting into a litigation situation, and the ensuing headaches that can follow. Seek the advice of a good lawyer and insurance company so that you can protect your business back home, and your new business venture in the United States. Should litigation occur, you want to make sure that your business back home is fully protected and cannot be touched.
On the revenue side of things, seek the advice of a good tax accountant and tax lawyer to determine what would be the most advantageous “status” of your business at various stages of growth. You may wish to have a 1-3-year plan, a 5-year plan, a 10+ year plan so that you can clearly evaluate the milestones your business needs to achieve before investing into major expenses and risks such as incorporation. For example, if you can export for a while without incorporating in the new market or set up a limited liability entity until such a time incorporation is justifiable, then that may be a good solution. Each step has its needs – no need to bite off more than you can chew. Moreover, from a business immigration perspective, there is a lot of business that can be conducted on a simple business visitor visa without having to fully sponsor any employees to live in the United States. Therefore, having a good lawyer explain to you what you can and cannot do under each varying business visa will save you time and money, and help you get going as fast and in the most-simple way possible.