Recent economic trends, particularly when it comes to sanctions, have shown that western countries with aligned value systems are doing more business with one another. This has been exemplified by the recent US sanctions on Russia. These sanctions have been followed by many other western countries imposing similar sanctions and many western businesses closing or substantially reducing their presence in Russia. To compensate for this loss of trade western nations are favouring doing business with one another. This may be an indication of future trends in the international commerce space.
Expanding a European business into the US market has, as a result, never been timelier. This can be a daunting and difficult task but this article aims to equip you with the tools necessary for success in the US.
1. Building business credit
Business credit is incredibly important in the US business environment. Your business’s credit score will affect your business’s ability to acquire any form of loan, credit card or even favourable terms with suppliers. It will also impact the perception of your business and how viable it is as a business. Thankfully building business credit is a straightforward process in the US. The first step in building business credit is to establish an LLC. Most, if not all, reputable lenders in the US will require your business to be a legal business entity. An LLC is the easiest legal entity to establish which provides limited liability asset protection. Banks and other lenders also prefer this structure because it insulates the business from risk on the owner’s behalf.
The next step is to acquire an Employee Identification Number (EIN). This functions in a similar manner to social security numbers for individuals. It will be important for tax reasons and will be necessary to establish a business bank account, another vital element of building business credit. A business bank account will be necessary to acquire a business credit card. Obtaining a business credit card will provide liquidity for your business as well as being a means of establishing your business credit. In-store credit cards are also recommended as they develop your credit as well as providing miscellaneous benefits for your business.
If you would like more information on how to build business credit consult this website for more resources and helpful advice on building business credit quickly and efficiently.
Photo: TRUiC2. Setting up an LLC
An LLC or limited liability company is a business entity which provides limited liability asset protection to its owners. The benefit of this is two-fold. Firstly, the company is protected from liability on the behalf of the owner and secondly the owner is protected from liability on behalf of the company. This is a very useful business structure to establish in the US and as mentioned is also the first step toward building business credit.
3. Understanding US Law
US law is made more complex by the relationship between the federal government and the individual states. Federal law applies to every state but each state has its own legislative powers for its internal affairs. The extent and usage of these powers differ from state to state. This extends to the realm of tax law too. Each state has different laws regarding tax on both individual and business income. This means that tax varies wildly depending on the state. Some states have no income tax while others have high income tax rates. It is very beneficial for a European business to shop around to find the best state to establish themselves as this can have significant benefits in terms of tax and ease of doing business. It is also recommended that your business consult with a lawyer or an accountant who is proficient in the laws of the state in which you would like to do business.
4. Learning from the mistakes of others
The best way to avoid making mistakes is to learn from the mistakes of others. Many European businesses have thrived in the US while many have failed. It is important to understand why this has been the case and learn from it. Studying examples of businesses in your industry which have made a successful transition across the Atlantic is just as important as studying businesses which have not. Both of these things will equip your business with the knowledge of how to succeed and more importantly, how not to fail.
5. Networking
Networking is a fundamental aspect of business. Developing and maintaining connections is vital to the success of any business. While your business will most likely have a well-established network in Europe or at least your home country it is unlikely that this will transfer seamlessly to the US. Differences in culture, language and the nature of business will make it more difficult to translate networking skills as well. This is something that can be developed over time and is also massively supported by the rise of social media. Brand awareness is enormously beneficial for expanding your business to the US as it provides familiarity to your customers. This can be developed easily and efficiently with the help of a social media presence and social media marketing. Social media can also be used as a tool for business networking as social media like LinkedIn is designed to facilitate the creation of these connections.
Final thoughts
With the combination of these tools your business can find success in the highly lucrative US market. Setting up an LLC with the first step toward the success of your business as well as the first step toward developing your business’s credit score. This is vital to acquire further funding for your business. Gaining an understanding of US law and how this can be used to your advantage will help enormously with your business’s ability to succeed. Learning from the mistakes of others will give you the information your business needs to avoid those mistakes altogether. Finally, networking will give your business the edge it needs to beat out the competition and stake its place in the US.