Breaking into the U.S. market — with its 350 million people and $17.5 trillion economy — is a complex proposition. We asked Josh Balster, vice-president of sales for Avitus Group Companies, a Colorado-based company that helps foreign exporters from Canada, Europe, China, England, India, Japan and Singapore, make their mark in the U.S. for his top five tips on doing so.
1. Don’t attack it as a whole: The biggest mistake foreign exporters make when looking at the U.S. is to see it as one country instead of 50 states, each of which operates, more or less, independently. “You have to understand that it’s a big place and figure out the market that provides the best demographic for your business,” Balster says. “There are a lot of sub-economies within the greater U.S. and you can’t really attack it as a whole. For smaller businesses, it’s important to understand that market and pick a place based on research that will be best for your product or service to be sold in. Start there and grow out of that.”
2. Figure out your market: Balster talks to a lot of exporters who are familiar with Los Angeles, New York and San Francisco and they often want to start with those cities. But in those places, the exporter will be a tiny fish in a huge pond. “If you want to separate yourself, it’s important to look at other markets,” Balster says. “Think about what other city or state you could attack where you can grab more of the market share and provide a unique product that no one else is providing?”
3. Know your consumers and market to them: Get to know U.S. consumers and how their minds work. Culturally, Americans are similar to Canadians, Balster says, but there are differences. “How we make purchases is important to understand. No. 1, you must have a great website. Most U.S. consumers, whether they’re private individuals or a business consumers, will buy or find your company online. In the U.S., when we want to find out about a company, we Google it. You have to make sure you have a website that pops up on the first search-engine page. If you’re on page two, three or four, no one’s ever going to look at you. We have so many options, we just move on. Your website also has to be functional and easy-to-navigate. If it’s difficult to manoeuvre, we’ll click out of it and move on.”
4. Figure out the rules: If you’re a company that will have employees in the U.S., you need to understand the rules around that. If your employees are strictly in sales, you don’t need to set up a legal entity, but if they’re doing more than sales, you do. “If you’re hiring U.S. employees, you need to understand how the U.S. worker thinks and if you want to hire the best workers, you have to offer a competitive wage, which will vary according to state. The same jobs in Denver and Southern California pay very different wages,” Balster says. U.S. workers also have high expectations in terms of corporately sponsored benefits. “Benefits are privately managed and not required by law, but employers who can put together an offer with a good health, dental, vision and life insurance plan often attract top talent and you’re only as good as your workforce,” says Balster, who also recommends being mindful of where your talent pool is. He remembers a medical device manufacturer who wanted to set up at Scripps Ranch, a medical centre of excellence in San Diego. He advised against it because the workforce there is largely made up of doctors, nurses and medical administrators, not people who work in device-manufacturing plants.
5. Limit your tax liability: There are consulting firms, such as Balster’s, that exist to give this kind of advice. “It’s important to work with a firm that will provide good information on each state and municipality in terms of their tax laws — income tax and payroll tax,” Balster says. “It’s really as simple as knowing what they are and making sure you account for them. Any good certified professional accountant or a firm like ours will do that work for you. The last thing you want is the U.S. Internal Revenue Service shutting you down. It’s also important to understand human resource and labour laws.”