Reviewed by Laurie Spicer · Last reviewed: October 19, 2026
This article is for general information only and does not constitute legal, tax, or HR advice. Consult a qualified professional for your situation.
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, then British Consul General in New York, 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, for example as a point of contact for customers. You might then use another state for back-office work to reduce hiring costs.
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. That can expose your whole company to US liabilities and filing obligations, so take tax and legal advice first. On top of this, you could face extra legal liabilities and struggle to attract investment as a branch office.
Ask the experts
You can do plenty of research in advance, and many resources are free online. But there is no substitute for expert advice on tax and the law.
Talk to an experienced international tax adviser about how to set up your US entity. Professional advice gives you a clear view of 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’.
Test the water with an easier way into the USA
The average cost of setting up a business in America is $65,000. That is a lot of money and several months to commit. It is a big financial risk if it does not 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 begin to employ American workers, you may realise your business needs to adapt.
You might need to change your brand name, adjust your messaging or adapt your product for US customers. 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.
Legal fees may be higher than expected, hiring may cost more, or you may need to adapt your product. You need the flexibility 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. For the mistakes we see most often, read our 9 lessons from failed US expansions. For the full route, see our step-by-step guide to entering the US market.
Frequently Asked Questions
Quick answers to the questions international companies ask most about managing US expansion risk.
What are the biggest risks when expanding to the US?
The biggest risks are underfunding, misjudging state rules, choosing the wrong location and a product that does not fit US buyers. Employment compliance mistakes and slow banking or setup can also stall progress. Research each state, test demand before committing, keep a cash reserve and take expert advice early to keep these risks under control.
How can I test the US market before committing?
Start small. Hire one or two people through an Employer of Record, use a virtual office for a US address and focus on a defined region or customer group. Set clear milestones for sales and costs. If results are strong, set up your own entity and scale. If not, you can exit at limited cost.
Why is a branch office risky for US expansion?
A branch is part of your home company, so the parent company can be directly exposed to US lawsuits, debts and filing obligations. A separate US subsidiary, such as an LLC or corporation, usually ring-fences that risk. Take legal and tax advice on the right structure before you sign US contracts or hire staff.
How much backup funding should I keep for US expansion?
Keep a reserve on top of your planned budget, because legal fees, hiring costs and product changes often run higher than expected. The right amount depends on your size and plans. Many companies plan for at least 12 to 18 months of US costs before expecting the operation to pay for itself. Review it quarterly.
Should I spend time in the US before expanding?
Yes. Visiting the US helps you meet customers, partners and advisers, and test how your offer lands. It also shows you how US business culture differs from home. Plan regular visits during the first year. Senior leaders who spend real time in the market make better decisions on location, hiring and pricing.
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