The US is the largest consumer market in the world, making it an attractive destination for businesses. However, failure rates among US businesses are high, with around 50% of them failing within the first five years.
There are a lot of documented reasons why these gross percentages of businesses fail a few years from inception, and not investigating the market kingly sits at the top of the list. But, you can save yourself from this seemingly inevitable failure.
Undoubtedly, market research helps identify potential gaps, and understanding local regulations reduces compliance risks. That’s why we created this guide to offer actionable insights, grounded in real-world data, and help you tackle challenges proactively and position your business for a successful US entry.
Here’s the pre-launch checklist that should guide your business entry strategy in the US:
- Market research and analysis
- Legal and regulatory considerations
- Financial planning and funding
- Branding and marketing strategy
- Operations and supply chain
- Human resources and talent acquisition
- Taxation and accounting
- Intellectual property protection
- Risk management and contingency planning
Market research and analysis for smooth business entry
As aforementioned, this serves as the foundation for a successful US business entry strategy. Through thorough research and analysis, you’re guaranteed to:
- Reduce the risk of entering a new market blindly
- Develop strategies that align with actual market needs and preferences
- Identify unique selling points that set your business apart from competitors.
- Craft marketing campaigns that resonate with the right audience.
- Contribute to sustained business growth and success
You have surveys/questionnaires, social media monitoring, data analysis, focus groups, and competitive analysis at your disposal. Without it, your business structure is built on nothing solid. Here’s a closer look at the key components of effective market research and analysis:
- Identify your target market and audience
- Analyse market trends, competition, and demand
- Conduct a SWOT analysis to assess strengths, weaknesses, opportunities, and threats
Legal and regulatory considerations for US Business Entry
The World Bank’s Ease of Doing Business Index ranks the United States highly in terms of ease of starting a business. However, each state may have additional regulations and requirements.
Properly addressing legal considerations is important to ensure a seamless and compliant entry into the market. Here are key aspects of this pre-launch checklist:
1. Choose the appropriate legal structure
Common options for businesses entering the US market include Limited Liability Companies (LLC), Corporations (C-Corp or S-Corp), and partnerships. Your choice can affect your business’s operations, liability, and taxation because each option has distinct advantages and disadvantages.
For example, an LLC offers limited liability protection and flexible taxation, while corporations provide robust liability protection and options for raising capital. So, choose the one that aligns with your business goals and growth plans.
This ensures your business is recognized as a legal entity and can operate within the jurisdiction. This often involves filing necessary documents with the Secretary of State or the state’s business registration office. The registration process may vary based on the chosen legal structure and the state where you plan to operate.
3. Obtain licenses, permits, and certifications
These requirements vary based on factors such as your industry, location, and the nature of your business activities. Examples include health permits, building permits, environmental clearances, and professional licenses.
That’s why it’s important you conduct research and obtain the necessary documentation before launching will prevent potential legal setbacks and delays.
4. Comply with federal, state, and local regulations
Federal regulations often include tax regulations, employment laws, and industry-specific standards. State and local regulations can vary widely, covering areas such as zoning, employee rights, and business operation hours. So, consider seeking legal counsel to understand the requirements for business registration, permits, licenses, and tax obligations.
Financial planning and funding
The Small Business Administration provides resources and guidance on accessing financing options for small businesses in the United States. To ensure a strong start and sustained growth, focus on these key areas:
1. Estimate your startup costs and create a budget
Identify all the expenses associated with setting up your business, including equipment, inventory, marketing, legal fees, and employee salaries. Then, develop a detailed budget to guide your financial decisions and allocate resources effectively.
2. Explore financing options
Consider different financing avenues such as self-funding, bank loans, venture capital, angel investors, or crowdfunding. Each option comes with its advantages and considerations; choose the one that aligns with your business objectives and financial capabilities.
3. Set up a US business bank account
Creating a separate business bank account in the US streamlines financial transactions and provides a clear separation between personal and business funds. This also enables accurate record-keeping and financial reporting.
4. Establish your financial projections
Develop realistic financial projections for the first few years of your business operation. Include estimates of revenue, expenses, and profits, and adjust these projections based on market trends and business performance.
Branding and marketing strategy
You also need to tick creating a strong online and offline presence off your list. This is marathon race that requires careful planning of your brand localization and marketing strategies. Consider the following components:
- Develop a strong US-centric brand identity that resonates with the values, aspirations, and preferences of US consumers.
- Craft a compelling value proposition that differentiate your products or services from competitors and addresses how your solutions fulfill their needs.
- Create a comprehensive marketing plan that involves digital marketing, social media, content creation, and traditional advertising to increase your brand visibility.
- Build a user-friendly and visually appealing website that showcases your offerings and provides a seamless user experience. You can either design one with no-code solutions, or employ a professional.
Operations and supply chain for efficient business processes
Efficient operations and a well-managed supply chain are crucial for meeting customer demands and maintaining a competitive edge. Focus on the following aspects:
- Secure reliable suppliers, manufacturers, and distributors within the US to ensure timely delivery of products and services
- Set up a streamlined distribution and logistics network that efficiently moves products from point of origin to customers. The US Census Bureau provides comprehensive data on various trade-related statistics, including imports, exports, and transportation.
- Implement inventory management systems to track stock levels, monitor product movement, and avoid stockouts or overstock situations.
- Design a clear and responsive order fulfillment process to provide customers with a positive experience. Additionally, prioritize exceptional customer service by addressing inquiries, concerns, and feedback promptly and professionally.
Human resources and talent acquisition
You need a strong team for your business to withstand the market conditions, and to grow.
- Clearly outline the roles and responsibilities of each team member.
- The United States has a competitive job market, with 6.4 million job openings as of July 2021. Recruit qualified US-based employees who understand the local market and culture.
- Familiarize yourself with US labor laws, including regulations related to employee rights, wages, benefits, and working conditions. Compliance with these laws is essential to avoid legal issues.
- Develop a company culture that fosters collaboration, innovation, and a positive work environment to attract and retain top talent.
Taxation and accounting
Proper tax planning and adherence to accounting best practices not only ensure your business’s financial health but also prevent legal and financial troubles down the line. Here’s what you need to do to navigate the US taxation and accounting landscape, and maintain financial transparency and compliance:
- Obtain an Employee Identification Number (EIN) from the Internal Revenue Service (IRS). This unique identifier is necessary for tax reporting and opening a business bank account.
- If your business involves selling physical goods, determine whether you need to collect sales tax in the states where you operate. Register for a sales tax permit in those states.
- If your business involves transactions with international entities, understand transfer pricing rules to ensure fair pricing for goods and services.
- Be aware of any tax treaties between the US and your home country that could affect your tax liability.
- Engage a US-based accountant or accounting firm with expertise in local tax regulations. They can provide guidance on tax planning, deductions, and record-keeping practices.
- Explore available tax incentives and deductions that can benefit your business. These can include deductions for business expenses, research and development credits, and investment incentives.
- Keep accurate and organized financial records to ensure compliance with tax laws and timely reporting. Use accounting software to track expenses, revenues, and other financial transactions.
- Regularly review your tax strategy and financial situation with your advisors. Tax laws can change, and it’s important to stay up-to-date.
Intellectual property protection
It’s an increasingly competitive business landscape. With so many businesses offering similar products and services, it’s important to protect your intellectual property (IP) in order to safeguard your competitive edge and innovations. Here’s how:
- Register your brand name, logo, and any distinctive symbols with the United States Patent and Trademark Office (USPTO). This safeguards your brand identity from unauthorized use and helps prevent customer confusion.
- If you have original creative works such as literary, artistic, or musical content, consider registering them with the US Copyright Office to secure your rights and prevent plagiarism.
- If your business involves innovative products or processes, securing patents can provide exclusive rights to your inventions for a specific period, fostering innovation and granting a competitive edge.
- Conduct thorough research to ensure your chosen business name, logo, or product doesn’t infringe on existing trademarks or copyrights in the US.
- Implement non-disclosure agreements (NDAs) and confidentiality agreements with employees, contractors, and partners to safeguard proprietary information and trade secrets.
- If your business operates globally or plans to expand beyond the US, consider international IP protection strategies, such as filing for protection in other countries.
Risk management and contingency planning to prepare for the unexpected
The COVID-19 pandemic and lockdown led to supply chain disruptions, and hundreds of businesses forced to close. Also, the adoption of artificial intelligence (AI) in US enterprises grew from 48% in 2018 to 72% in 2020 which rendered certain products or services obsolete.
But, risk management and contingency planning are not just about preparing for worst-case scenarios; they’re about being proactive and adaptable in the face of challenges.
By incorporating these elements into your pre-launch checklist, you’re setting the stage for a business that can weather uncertainties and capitalize on opportunities, ensuring a more successful entry into the dynamic US market.
- Conduct a comprehensive risk assessment to identify potential threats to your business, ranging from economic downturns, and market fluctuations to supply chain disruptions.
- Devise strategies to mitigate identified risks, such as diversifying suppliers, establishing emergency funds, or implementing business continuity plans.
- Prepare contingency plans outlining specific steps, such as insurance coverage, emergency protocols, backup systems for business continuity, and crisi communication channels.
In wrapping up, the journey of establishing your business in the US market is an exciting yet intricate one. Through meticulous preparation and strategic planning, you’ll be well-equipped to navigate the challenges and capitalize on the opportunities that lie ahead.
By prioritizing 9 items on your pre-launch checklist, you’re not just launching a business – you’re setting the stage for a successful and enduring venture in the vibrant landscape of the United States.