Should My Agency or Start-Up Open an Office in the USA?

Business.Insights

Is it us or is there a growing obsession with agency or startup businesses attempting to launch in the USA?

Whilst the market undoubtedly offers significant upside for those that crack it, history is also littered with stories of retreat and costly mistakes here.

Why?

Doing business in America is NOT the same as doing so in the UK. And no, your British accent won’t unlock the pot of gold!

Our advice is ALWAYS to do your homework first. A sensible preference is always to win and service US business from the UK and visit regularly rather than simply jump feet first.

‘Boots on the ground’ can be great, sure. But it is NOT the magic wand many believe it is and the error of sending people over, committing to the expense of setting up an American entity and finding office space etc is not to be sniffed at.

It must be you.

And don’t think you can make it work by simply sending a foot soldier either, or by hiring someone from the US to do the hard yards for you. In practice it means the founder and/or the CEO moving and committing to 12 months+ full time effort on the launch.

Which brings us onto the legal requirements for such a move…

Visa requirements

Understanding the visa requirements is crucial for a successful transition. Let’s look at the various options you have should you be considering the move.

1. Types of Visas for UK Entrepreneurs:

When it comes to visas, there are several options that UK citizens can consider:

  • E-2 Treaty Investor Visa: this visa is for investors from countries with treaties with the US. You’ll need to make a substantial investment in your US business.
  • L-1 Intracompany Transferee Visa: If you’re expanding an existing business in the USA, this visa might be a good fit. It allows for the transfer of key employees, including business owners.
  • EB-5 Immigrant Investor Visa: For those who seek permanent residency, the EB-5 visa is a great option. You need to invest a significant amount and create jobs in the US.
  • H-1B Visa: While primarily for skilled workers, this visa can be utilized by business owners looking to work within their companies, provided certain conditions are met.

2. E-2 Treaty Investor Visa: My Experience

The E-2 Treaty Investor Visa is our choice. Here’s why…

  • The UK and the US must have a treaty in place.
  • Your investment needs to be substantial, and the process requires thorough documentation.
  • Be prepared for processing times and understand the renewal and family members’ options.

3. L-1 Intracompany Transferee Visa: For Expanding Businesses

If you’re expanding your business into the USA, the L-1 visa could be your solution:

  • Ensure your business qualifies, in terms of size and duration.
  • The application process involves several steps, and the duration of stay is limited.
  • Don’t forget to explore the visa options for your family members.

4. EB-5 Immigrant Investor Visa: A Path to Permanent Residency

The EB-5 visa offers a route to permanent residency. Here are the key points:

  • The investment amount is substantial, and it must create jobs.
  • You can choose between the direct investment or regional centre programs.
  • The process is rigorous, but the reward is a Green Card.

5. H-1B Visa for Business Owners: An Alternative Route

While primarily for skilled employees, business owners can also explore the H-1B visa:

  • You must establish a genuine employer-employee relationship.
  • Keep in mind the annual cap and the lottery system.
  • Consider alternative options if H-1B isn’t immediately available.

Nothing worth having is ever easy.

The point then of highlighting the above is not to put you off. Quite the opposite in fact. Instead, it’s about ensuring you go in ‘eye-wide-open’ to the realities if you are to have any real chance of significant long-term success.

And that doesn’t just stop at visas and founder commitment of course either.

You should also ensure you draw up a properly timeline and costed plan for doing it considering all of the below:

  1. Market Research:
    1. Conduct thorough market research to understand the demand for your product or service in the US market. Analyse your competition and target audience.
  2. Business Plan:
    1. Develop a comprehensive business plan that outlines your business goals, strategies, and financial projections. A well-structured plan will be invaluable for attracting investors and securing financing.
  3. Legal Structure:
    1. Decide on the legal structure of your business, such as a sole proprietorship, partnership, corporation, or LLC. The choice affects taxation, liability, and management.
  4. Location:
    1. Choose the right location for your business. Consider factors like proximity to customers, suppliers, and competitors, as well as local regulations and tax incentives.
  5. Financing:
    1. Determine how you’ll fund your business. Options include personal savings, loans, venture capital, or crowdfunding. Explore US-based financing options and grants for which you may qualify.
  6. Taxation:
    1. Understand the US tax system, including federal, state, and local taxes. Consult with a tax advisor to optimize your tax strategy and ensure compliance with tax laws.
  7. Business Licenses and Permits:
    1. Identify the specific licenses and permits required for your business at the federal, state, and local levels. Failing to obtain the necessary permits can result in legal issues.
  8. Employment and Labour Laws:
    1. Familiarize yourself with US employment laws, including minimum wage, overtime regulations, and employee benefits. Create compliant employment contracts and policies.
  9. Intellectual Property:
    1. Protect your intellectual property rights by registering trademarks, patents, and copyrights as necessary. Enforce your IP rights to prevent infringement.
  10. Banking and Financial Services:
    1. Set up a US business bank account to handle transactions and manage finances. Establish a relationship with a local bank or financial institution.
  11. Insurance:
    1. Purchase appropriate business insurance coverage to protect against risks, such as liability, property damage, and business interruption.
  12. Networking:
    1. Build a network of contacts within the US business community. Attend industry events, join local chambers of commerce, and connect with potential partners and clients.
  13. Cultural Awareness:
    1. Be aware of cultural differences and nuances in business practices between the UK and the USA. Understanding the local business culture can help you build relationships and succeed.
  14. Compliance and Regulations:
    1. Stay updated on changing regulations and compliance requirements in the US. This may include industry-specific regulations, labour laws, and health and safety standards.
  15. Accounting and Record Keeping:
    1. Maintain accurate financial records and accounting practices to ensure compliance with US financial regulations and facilitate tax reporting.
  16. Exit Strategy:
    1. Consider your exit strategy, even when starting the business. Knowing how you plan to exit, whether through sale or succession, can guide your business decisions.
  17. Business Support Services:
    1. Explore support services such as business consulting, legal advice, and mentoring, especially if you’re unfamiliar with the US business landscape.
  18. Adaptability and Resilience:
    1. Be prepared to adapt to changing circumstances and challenges. The business environment can be dynamic, and your ability to pivot and persevere is essential.

Where should you consider?

By this point then you have a good idea of what you should prepare for and what needs to be in place to give you a shooter’s chance of winning in America. The reality has been painted and if you are still up for it then one of the questions, we get asked the most by clients is ‘where should we consider opening’?

Choosing the best American city to open an office for your UK agency business depends on various factors, including your industry, target market, business needs, and personal preferences. The United States offers a wide range of cities, each with its own advantages.

Here are some popular choices and the industries they are known for:

  1. New York City, New York:
    1. A global financial and business hub, New York City is suitable for finance, marketing, advertising, media, and creative agencies.
    1. Provides access to a large and diverse market.
    1. Offers a dynamic and competitive business environment.
  2. San Francisco and Silicon Valley, California:
    1. Ideal for technology, software, and digital marketing agencies.
    1. Known for its innovation and access to venture capital.
    1. Hub for tech start-ups and established tech giants.
  3. Los Angeles, California:
    1. Suitable for entertainment, media, advertising, and fashion agencies.
    1. A major centre for the film, television, and music industries.
    1. Offers access to a creative talent pool.
  4. Chicago, Illinois:
    1. A diverse city with a strong presence in finance, marketing, and consulting services.
    1. Known for its central location and transportation infrastructure.
  5. Austin, Texas:
    1. A growing tech and creative hub, ideal for agencies in digital marketing, design, and technology.
    1. Attracts start-ups and tech events.
  6. Boston, Massachusetts:
    1. Well-suited for agencies specializing in healthcare, biotech, and education.
    1. Home to prestigious universities and research institutions.
  7. Washington, D.C.:
    1. Ideal for government affairs, public relations, and lobbying agencies.
    1. Proximity to government agencies and non-profit organizations.
  8. Miami, Florida:
    1. Suitable for businesses targeting the Latin American market.
    1. Known for its diverse culture and international trade.
  9. Denver, Colorado:
    1. A growing tech and business hub with a focus on sustainability and outdoor industries.
    1. Attracts start-ups and offers a high quality of life.
  10. Atlanta, Georgia:
    1. Ideal for marketing, logistics, and transportation agencies.
    1. A major transportation and logistics hub.

When selecting a city, consider factors such as your business’s industry, client base, talent pool, cost of living, taxes, and local business climate. Additionally, it’s essential to conduct thorough market research and potentially visit the cities you’re considering getting a first-hand feel for the business environment and opportunities. Each city offers unique advantages, so the best choice will depend on your specific needs and objectives.

You can win!

But for those with enough resilience and will power there can be little doubt that opening a US office can 5-10x your business. And, as usual, those that fail to prepare can prepare to fail!