Seven Risk Management Strategies for US Business Expansion

We've compiled the top seven risk management strategies you should implement to help your expansion into America go that bit smoother.
business man looking at documents

The US market is undeniably an attractive prospect for many companies. It is, after all, one of the world’s biggest and most profitable economies.

Expanding to America isn’t easy, however. It takes time, money and skill to unlock the potential of the US market for your business and many have failed. That shouldn’t deter you, but it should serve to demonstrate that there is risk involved when expanding to America.

There are a number of ways in which you can mitigate this risk in advance. Here are seven strategies to consider:

State by state research is crucial

Yes, America is a vast country, but you can’t afford to get carried away in thinking about the whole map. You need to think long and hard about where you want to expand to. This means considering where you’ll be able to find workers with the right level of expertise for your needs and where your customers and clients are likely to be based.

As Danny Lopez, British Consul General in New York and Director-General for UK Trade & Investment USA told us: “Secure an initial set of customers, secure an initial geographical patch where you are going to try to make it, before trying to take the whole country on.

You might well find that you need ‘boots on the ground’ in one state – where you can benefit from a point of contact, for example – and look to another for back-office or admin purposes in order to reduce the cost of hiring employees in America.

While wages vary from state to state, so too do taxes and regulations.

Avoid setting up a branch office

The way in which you structure your US entity can reduce the risk involved when expanding to America. In many cases, this means avoiding simply setting up a branch office in the US.

A branch office is not a separate legal entity and, therefore, establishing one could mean that you pay tax on your entire corporate income, not just that earned by your US office. On top of this, you could face extra legal liabilities and struggle to attract investment as a branch office.

two man working, one pointing at a document

Ask the experts

While there’s plenty of research that you can do in advance, and a number of resources freely available online to help, there’s no substitute for expertise when it comes to tax and the law.

Whether it’s talking to an experienced international tax advisor on the best way to set up a legal entity in the US or consulting an immigration attorney on how to transfer employees ‘across the Pond’, it’s vital that you seek out advice from professionals so that you can get a good insight into the best way forward for your business.

Spend time in the country

If you want to do business in the US then you should be prepared to spend some time in the country. Get to know the location you intend to expand into, speak face to face with would-be employees and clients.

Not only that, but it’s important that you take some time to understand the differences in workplace culture. From pay to benefits, working hours, meeting etiquette and the way people talk and interact, there are many things that are noticeably different about working in America. 

By spending some time in the US, you can at least avoid the risk of basic misunderstandings that can arise from ‘going in cold’.

aerial photo of NYC at night

Test the water with an easier way into the USA

The average cost of setting up a business in America is $65,000. That’s clearly a lot of money to commit – not to mention several months of time to complete the process – and represents a big financial risk if it doesn’t pay off. Plus, there’s more time and money involved in leaving the US if things don’t go to plan.

Foothold America, therefore, offers businesses an alternative. Through our Employee Management Service, Foothold America hires the employees who represent you without the expense of setting up your own US entity. Besides, we would manage payroll, medical benefits, retirement, income tax deductions, expenses, leave tracking, workers compensation, unemployment, for your employee compliantly in whichever state they live. Businesses are able to pay a consultancy package and only need to give two weeks’ notice should they require to leave. We believe this is a quicker, easier and more cost-effective route to the US market – and helps to mitigate some of the risk involved. Contact us to find out more.

Be prepared to tweak your product or service

When you spend time in the US – and when you begin to employ American workers – you might well realise that you need to adapt your business to suit the market.

Whether it’s altering your brand name to speak more clearly to target customers, amending your messaging so that it’s right for the US, or changes to the product or service you’re offering to suit the tastes of customers and clients, you have to be prepared to embrace change. Simply ploughing on and expecting the US market to love your brand as it is can be a risky strategy.

Have a backup fund

As we’ve already discussed, expanding a business in America requires a significant amount of funding. While businesses can plan ahead and factor in the expected costs, it’s well worth setting aside a backup fund in case there are any unexpected payments to make.

Whether it’s underestimating legal fees, paying slightly more to hire the workers you need or – as stated above – the need to tweak your product or service to suit the market you need to be able to be agile enough to react. For some, this may mean delaying expansion to America slightly until you have raised sufficient money to be able to have an emergency fund.

SENIOR MARKETING MANAGER
Multilingual marketing professional with more than ten years of experience in traditional and digital marketing for B2B and B2C sectors. Miruna has an extensive background in building customer engagement and ensuring that clients have the best tools and information in hand.

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