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The 3 Phases of Successful US Expansion

Expanding to the United States is a vital step in the global growth trajectory of almost every venture-backed tech startup in the UK and Europe. However, it requires careful planning, execution, and understanding of the unique cultural, legal, and business environments in the US. In this blog post, we will discuss the three phases of US expansion: Entity Formation, Establishing Operations, and Go-To-Market. Completing each phase in sequential order will give your company it’s best opportunity for a successful US expansion.

Phase 1: Entity Formation

The first phase of US expansion is Entity Formation. This phase involves setting up a legal entity in the US and obtaining the required Federal and State identification numbers. Here are the tasks for this phase:

  • Choose the type of legal entity to form, based on the business goals and needs, such as a Limited Liability Company (LLC), or C-Corporation

  • Register the legal entity with the Secretary of State in the chosen state of formation and create Articles of Incorporation, Bylaws, and Officers

  • Obtain a Federal Tax Identification Number (FEIN) from the Internal Revenue Service (IRS)

  • Obtain State tax withholding numbers and State unemployment numbers

  • Open a US bank account for your US corporation

  • Hire a registered agent in the US to receive official correspondence on behalf of the company

Phase 2: Establishing Operations

The second phase of US expansion is Establishing Operations. This phase involves setting up the necessary infrastructure, personnel, and resources to support the company's operations in the US. Here are the tasks for this phase:

  • Site selection - Be sure to analyze a combination of these important criteria: Time zone overlap with the home office, access to talent, operating costs, startup ecosystem, ease of travel, proximity to customers and partners, plus the local expat community

  • Accounting operations including: accounting software, accounts payable, accounts receivable, financial statement compilation, and payroll

  • Select a Certified Public Accounting firm to determine transfer pricing and file Federal, state, and local taxes

  • Select a US Law Firm for entity formation, US contracts & agreements, plus Visa and immigration needs

  • Human Resources. You’ll need to implement payroll, benefits, and insurance solutions for your employees plus establish a company culture and employment policies that will be attractive to the top US talent in your industry

  • Secure insurance coverages. General liability insurance will be required and you may potentially also need coverage for worker’s compensation, errors & omissions, cyber, privacy, Directors & Officers, employment practices

Phase 3: Go-To-Market

The third and final phase of US expansion is Go-To-Market. It’s a mistake to believe the go-to-market strategy that succeeded in your home country will necessarily be successful in the US market. You will need to reexamine your entire go-to-market strategy for the US. Here are the GTM tasks in this phase:

  • Product-market fit: Determine how your product can fulfill your US target customers’ needs and solve their specific problems

  • Branding and positioning: Clearly understand how your brand differs from the competition and how it will be positioned in the US market

  • Pricing: Conduct research to determine if your potential customers prefer licensing, subscription, or usage base pricing. Understand the competition’s pricing

  • Target Customers: Identify the industry, size, location, typical buying process for your target customers and the best routes to market to reach them

  • Strategic Partners: Determine which strategic partners can provide access to customers and credibility in the US market and how will you recruit, compensate, and manage them

  • Demand Generation: Plan how you will build awareness, create content, drive leads, nurture interest, and manage the leads process. Products rarely sale themselves in the US market

  • Sales Motions: Decide if a top-down direct sales or bottom-up product led growth strategy will be the best sales approach and hire your sales and customer success teams accordingly

  • US Contracts, Agreements, and Sales Support Materials: To succeed in the US market, your company will need to create contracts and agreements for customers and partners, plus develop sales support materials tailored to the US market

In conclusion, expanding a business to the US can be a complex and challenging process, but it is a must for most venture-backed tech startups in the UK and Europe. By following the three phases of US expansion – Entity Formation, Establishing Operations, and Go-To-Market – and by carefully planning and executing each step of the process, companies can successfully navigate their US market expansion and achieve their revenue goals. If you have questions about US expansion, contact us today to learn more about how we can help your company succeed in the US market.

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