Why the United States?

 

The United States of America is home to one of the world’s most sophisticated and competitive economies. As one of the biggest and affluent consumer markets, the chance of there being a place for your product or service is very good, indeed.

 

The United States consists of many different geographic and demographic consumer markets, each with distinct tastes, purchasing behaviours, distribution

systems, regulations and climates. Business and consumer practices can not only vary from state-to-state, but city-to-city, and town-to-town, too. If you want a general geographical segmentation, though, you need not look further than the 50 states (approximately 10 of which are larger than the UK).

 

Fortunately for the businessperson, the United States is fertile with information and there an overabundance of free market research, industry publications, statistics, associations, databases and studies available to help you identify where your product or service is most suited. This information can help you understand everything from the age and expenditure of your target market to their preferences and consumer patterns.

 

This is a noticeable difference between setting up business in the USA and elsewhere in the world: staggering information and business insight readily available to you. No niche left uncovered, no service or product overlooked. In terms of business, money and marketing, the United States is the high priest, and remains the most revered and atypical of all things capitalistic.

 

The US is also famous for its trade shows. Trade shows provide a one-stop forum where businesses can meet new and existing buyers, distributors, agents and media. They also provide a great opportunity for new suppliers to test products or services on the market, observe their competition and discuss trends. More on trade shows will be discussed later.

 

You’ll notice that it’s getting increasingly hard to talk about business prospects in the US without sounding sycophantic and adulatory. But it really seems inescapable: American culture is enveloped by business and money, and that much-talked about quest toward the proverbial ‘Dream’. It is the homeland of business and commerce, and here are the reasons why it might just be perfect for you.

 

 

What is the currency and exchange rate?

 

The currency used in the United States is the Dollar ($).

 

The current exchange rate is £1 to $1.99.

 

 

 

What is the population?

 

The population of the USA is just over 300 million.

 

 

What is the time difference?

 

The United States has six different time zones.

 

These vary between GMT -5 and GMT -10.

 

 

Do I need a visa?

 

Passports are a necessity for all visitors to the United States. There are few exceptions made. It is recommended passports have at least six months left prior to expiry date.

 

With a climate of heightened security and paranoia, vast regulations overshadow visas. Therefore, you should make intensive enquiries about the visa appropriate to your circumstances and the method of applying for such a visa. Do so as far in advance as possible.

 

It is also recommended that you research the regulations of commercial airline flights. Since 9/11, many restrictions and security measures have been introduced and enforced. Just so you know, taking an aeroplane between American cities and states is as commonplace as riding by train, tube or bus here in the UK.

 

Commonly, a long-term visa (E2 visa), once appropriated, will allow for a stay of roughly two years in the United States. Its purpose is to facilitate international business relations, and foster investment in the States by foreign nationals and corporations.

 

The following are three stipulations that must be met in order to acquire an long-term visa: nationality, substantiality and marginality.

 

Nationality

 

The investor (whether a corporation or an individual) must be a citizen or national of a treaty country. Assuming you are from the UK, there is no problem here. If the business is a corporation, over 50% of the ownership must be by nationals of a treaty country.

 

 

 

Substantiality

 

The US government, thorough as they are, will test your hunger for success by the amount of the investment you put at risk. There must be unequivocal and convincing evidence that there is enough capital available for equipment and operating expenses. If it is a new company venture, a ‘reasonable’ five-year business-plan can show that your plans for success are viable. Any money invested in the business must be actively at risk; not in a bank account, and not as security for a mortgage loan. Your capital must be directly at risk, and your appetite ferocious.

 

 

Marginality

 

The US government will not want to admit you, as an investor, into the US if your sole purpose of investment is to provide a living for yourself and/or your family. Your business plan or existing business will be tested to see if it’ll create and jobs within the United States and whether the profits will supersede that which is needed by you and your family. One test, for instance, determines if your business will be making a nice profit within five years. The government will look for evidence that your activity will help the local economy. Additionally, an investor with substantial income outside of the investment will also receive strong consideration with regard to marginality.

 

Visas for your personnel

 

Key employees of corporate or individual treaty investors have no maximum length of stay for their long-term visas. The United States law does not regulate the total length of stay and each admission to the country commonly receives a two-year admission. Transferred workers can include managers, supervisors and people with highly specialised skills that are needed by the corporation. 

 

Spouses and Dependents

 

Spouses and dependents are not permitted to work in the US unless they find merit to receive their own visa allowing employment.

 

 

What is taxation like?

 

Below are the current tax bands, based on a single employed person living in the United States. All figures are in Dollars ($).

 

Ÿ  10% on incomes between 0 and 8,025

Ÿ  15% on incomes between 8,026 and 32,550

Ÿ  25% on incomes between 32,551 and 78,850

Ÿ  28% on incomes between 78,851 and 164,550

Ÿ  33% on incomes between 164,551 and 357,700

Ÿ  35% on incomes of 357,701 and over

 

 

Economic Overview

 

The US is the globe’s largest national economy. Its gross domestic product (GDP) was estimated as $13.8 trillion in 2007. In their market-oriented economy, private individuals and businesses make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. Simultaneously, they face larger obstacles to enter overseas markets than foreign firms face entering US markets.

 

America is generally considered to amongst those at the forefront of technological advances, especially in computers, medicine, aerospace and military.

 

Soaring oil prices in 2005-2007 threatened inflation and unemployment, yet the economy continued to grow up to the end of 2007. Imported oil accounts for about two-thirds of US consumption. Long-term obstacles include:

 

Ÿ  Insufficient investment in economic infrastructure

Ÿ  Expedient rise in medical and pension costs of an ageing population

Ÿ  Sizable trade and budget deficits

Ÿ  Stagnation of family income in the lower economic groups

 

The merchandise trade deficit reached a record $847 billion in 2007. Together, these problems caused a marked reduction in the value and status of the dollar worldwide in 2007.

 

 

What are the essentials I need to know?

 

While we share many similarities with Americans, namely language and culture, our two nations are actually quite different. Understanding and adopting American idiosyncrasies will help ensure you are confident and tactful when negotiating deals and nurturing your business relationships. What follows is a list of fundamental things to watch out for:

 

 

Ÿ  Americans usually build relationships through business, not business through relationships. Lay out the details of the deal first; the relationship will organically follow.

 

Ÿ  Active selling is expected and encouraged, often to a degree that may be regarded as excessive here in the UK.

 

Ÿ  As the old saying goes, time is money. Be well prepared with samples, packaging and sales forecasts. Know your return on investment calculations or sales forecasts, pricing and logistics. Deadlines are not flexible and short; respond quickly or risk losing the business.

 

Ÿ  Being assertive is a virtue; ask for what you want, say what you mean, and do as you say. Being shy and indirect will be seen as a weakness in the US. The English have a tendency to be over-polite and to not speak up when it matters. You’re in the land of the business pitch now.

 

Ÿ  Be positive. The English characteristic of self-effacement and modesty can clash with Americans’ can-do mentality. Likewise, Americans tend to take things at face value, so first impressions are important.

 

Ÿ  Efficient follow-up is fundamental and often requires persistent and repetitive attempts to make contact. If you have telephoned or e-mailed someone several times without reply, do not assume they are not interested. On the contrary, perseverance is expected in the US, and it may take you a dozen attempts to get a response.

 

Ÿ  Business conduct in the US is generally conservative, courtly and concise. It is essential for information and benefits to be unequivocal to your potential customer.

 

 

Initial Setting-up Costs

 

Below are some typical costs you could expect when starting up your business in the United States.

 

Ÿ  Filing Fees for Incorporation. Expect these fees to range from approximately $80 to over $1,000, depending on the state.

 

Ÿ  Lawyer Fees. Expect these to range from $1,000 to $5,000, depending on the location and type of corporate entity.

 

Ÿ  Minimum Franchise Taxes. Some states impose minimum franchise state taxes of up to $800 or more.

 

Ÿ  Office Space. Expect even office shared arrangements to cost as much as $1,000-$5,000 per month, depending on the location.

 

Ÿ  Insurance. A business insurance package might cost as much as $4,000 per year or more.

 

Ÿ  Employees Salaries. Expect to pay a basic salary plus employment payroll taxes of at least $50,000 a year for a fulltime competent employee who is put in charge of running your US company. In high-cost-of-living states, this could be as large as $80,000 per year. Obviously, these salaries can be lowered in accordance with level of employee responsibilities.

 

Ÿ  Immigration Visas. Expect to pay between $1,500-$3,000 per visa fees depending upon the location and choice of visa.

 

 

 

Recruitment

 

The USA has a workforce of approximately 152 million, with an unemployment rate of 5%. The USA has a federal minimum wage of $5.85 per hour. This is set to increase to $6.55 on July 24, 2008, and again to $7.25 in 2009.

 

The minimum wage varies from state-to-state, even city-to-city. Some adhere to the federal wage, whereas some reach up to $8 per hour.

 

 

Are there any regulations I should know about?

 

The US is a highly regulated society, and is business culture is no exception. As such, businesspeople should be made aware of the many regulations, standards and guidelines that may affect the sale of their product or service. What follows is a list of predominant regulatory bodies.

 

 

Ÿ  US Customs and Border Protection for regulations affecting the importation of all articles into the US.

 

Ÿ  Food and Drug Administration (FDA) for regulations relating to US bioterrorism laws and the labelling of food, dietary supplements, cosmetics, drugs (both prescription and over-the-counter), medical devices, items that emit radiation and animal foods.

 

Ÿ  Environmental Protection Agency (EPA) for regulations affecting any product that may be considered toxic or hazardous to the environment such as pesticide, fungicide, rat poison or anti-microbial agents.

 

 

• US Department of Agriculture (USDA) through its Food Safety and Inspection Service (FSIS) is responsible for ensuring that the US commercial food supply is safe, wholesome and correctly packaged and labeled.

 

• Consumer Products Safety Commission (CPSC) for regulations and voluntary standards affecting consumer products that may pose a risk of injury or death, such as flammable products, toys, items containing lead and defective electronics. The CPSC comes under the umbrella of the Federal Trade Commission (FTC).

 

 

Franchise Opportunities

 

If you want to get into franchising, the United States is arguably the best place to do so. Not to sink into sycophancy again, but these guys are the godfather of franchising. Their home-grown franchises are easily the most recognisable and successful on the planet. We needn’t name them; they’re already permanently engrained our consumer psyche. Heck, they’re so big they even symbolically marked the end of the Cold War by setting up in Russia.

 

Buying a franchise in the States can, indeed, give you an essential head-start in business.

 

The United States also hosts the world’s largest franchise shows, where companies such as MFV Expositions bring together potential franchisees along with the industry’s hottest prospects, seminars and workshops.

 

 

Advertising

 

No country advertises and consequently consumes as much as the United States. It is the capitalist guinea pig on which the rest of the world is increasingly being modelled. For the business world, that’s just perfect. There isn’t a nook or cranny in American culture which hasn’t been infiltrated and transformed into a marketing tool. From Hollywood movies to internet pop-ups, it seems nothing is off limits. Here are some of the more cost-friendly methods sweeping the States:

 

The Internet

 

A website is a good foundation for any guerrilla marketing approach and is a valuable opportunity to build your brand, inform customers and impact buying decisions. Americans demand sophisticated websites, and these expectations must be met to avoid a slump in sales. Utilise all aspects of the internet: blogs, newsletters, special offers, viral campaigns, pop-ups, links, sponsorship of other websites, etc.

 

Free and Cheap Publicity

 

Attracting media coverage - which reaches your target audience by default - is a much better and effective way to influence buyers than investing in advertising space. Editorial endorsements carry incredible weight in the eyes of the US consumer, and media attention will help drive sales and create brand awareness. Identify industry publications in the UK and US, make contact with editors and send press releases, samples, articles and reviews of your product or service.

 

Celebrity

 

The best way to approach celebrities is to target their publicists or managers. Celebrities, local, regional and national, are a dime-a-dozen in the States. There will definitely be someone right and affordable for your product or service. It’s etiquette to pass on a free gift of your product or service, too, and this may help acquire their help.

 

Sponsorship

 

The US market attaches a lot of credibility to charity events and the organisations that support them. Your company may be a well suited to a local non-profit entity. Commercial events can also offer appealing sponsorship opportunities with good logo placement, media exposure and access to captive audiences.

 

 

How is day-to-day living like in the United States?

 

Obviously, being such a large country, it isn’t easy to generalise on life in the States. A metropolis like New York is going to offer you something far more different than the religious, mining state of Utah. However, these pointers should hopefully give you the right idea. The standard of living in the US varies greatly, both in terms of wealth and location.

 

The people of America are notoriously friendly. Some would even say overfriendly. It is important you don’t become intimidated by this, as people are confident and have no reservations about speaking frankly.

 

 

Utility Bills

 

Gas and electric companies typically provide two payment options. The first requires you to pay the full amount when billed each month. The other lets you pay an estimated budget each month, with any difference being reconciled at the end of the billing year. Some people find this more convenient, since gas and electricity bills can otherwise vary considerably during the summer and winter months.

 

Most utility companies have the option to have the monthly bill automatically deducted from your bank account.

 

The price of your bill is going to vary. Americans are known to use between 2 - 5 times more energy when compared to the rest of the world.

 

 

Healthcare

 

No vaccinations are needed to visit the US.

 

The US is overall a very safe place to visit health-wise. Cleanliness is good and, unless you have qualms about fluoridation, tap water is safe to drink.

 

 

Doctors

 

You will not be assigned to a local doctor automatically. You can search for one in a phone book or by driving around the city centres (practices are often well marked). You will need to find a practice that is accepting new patients, and you should be prepared to divulge your medical history.

 

Hospitals

 

In major cities there are usually a number of hospitals. In smaller cities, however, there may be as few as one.

 

If you cannot get to a hospital, the emergency telephone number is 911. This is the equivalent of 999 here in the UK. Simply request an ambulance to take you to a hospital.

 

However, if you can get emergency treatment from your regular doctor and avoid going to a hospital then you should do so. It may save on both time and money.

 

You should have proof of insurance available. Unsurprisingly, in an emergency, the hospital will work on you first, and then charge you the money. Hospital expenses are taken very seriously, though.

 

Grocery Shopping

 

Shopping in the States is very similar to shopping here in the UK. You have it all in abundance, from small, independent green grocers to large, salient supermarkets.

 

A benefit of shopping for food in America is generally getting more for your money.

 

Consider these normal opening and closing hours: 0800-2100 Monday to Saturday and 0900-1700 on Sunday. There are very many 24-hour convenience stores, too.

 

 

Driving and Roads

 

Motorways (interstates, freeways and highways) connect main city centres. There is a vast network of long-distance buses linking all major cities. Smaller cities, however, are generally not served adequately by public transport.

 

Driving is on the right-hand side of the road. States are now free to set their own limits, usually between 50 and 75 mph.

 

 

Air Travel

 

As previously stated, catching a plane in the United States is as commonplace as riding a bus here in the UK. They are a normal form of travel between cities and states. Highly developed, networked airline services connect most towns of importance. Fare systems have been deregulated, leading to fierce competition. Do yourself a favour and save some money by shopping around.

 

 

Telephone

 

From the UK the international dialling code for the USA is +001. All phone numbers within the US consist of a three-digit area code and a seven digit local number. When calling long distance, dial 1 then the area code followed by the seven-digit number. Many government agencies, car rental firms, hotels, etc, have free-phone numbers, which always have the prefix 1-800.