Could setting up in the US take your business to the top?

Setting up a business in the US? Here are 5 things to think about

With its vast size and huge population, the US is an appealing market. Plus, as an Australian business you can enter the US with few language or cultural barriers.

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The US is a varied place with significant economic differences between states, so it’s worth researching the business opportunities offered by different parts of the country. To help you get started, here are some of the top things to consider, including costs and location. 

Weigh up the pros and cons

The sheer size of the US can make it both a pro and a con. On the pro side you’ve got a huge potential audience as well as a varied choice of cities to base your business in. There are also great road, rail and air networks linking the country. 

The scale of the US does, however, mean you could be hit by transport costs and times. If you’re planning on having an east and west coast office will you need staff to travel between them and do you have the budget for this? Do you need to visit clients across the country and will this travel eat into your profit margins? Do you need to ship products? If so, check how long it will take to get them from your factory or warehouse to your end market as there’s a lot of terrain to cover. 

The process and rules for starting a business can vary from state to state. This might not be an issue if you can be flexible about where you base your business, for example you could choose a state that has low or no state corporate income tax. If you need to be in a particular area or to be based in multiple states then you’ll need to look into the legislation for these states in detail to make sure there aren’t any costs or restrictions that would be prohibitive for your business. 

Consider the costs

As well as the AUD to USD exchange rate there are a number of costs to consider when deciding if expanding to the US will be profitable for your business. 

As previously mentioned, taxes and legislation vary from state to state so to conduct a thorough cost analysis you’ll need to look into state as well as national rules for businesses. For example, only South Dakota and Wyoming don’t charge a state corporate tax, with charges for other states ranging from 2.5% in North Carolina to 11.5% in New Jersey. 

One positive factor is the federal corporate tax, which is 21% in the US, making it slightly lower than the 30% in Australia.  

The US has a large commercial real estate market so you’ll have a great choice of locations if you need a US office, factory or warehouse. As you might expect, prices vary between states. In terms of price per square foot for offices, New York is the most expensive, with LA being significantly cheaper. Cheaper still are Boston, Philadelphia, Chicago and Atlanta with Dallas having some of the most affordable office space. 

Research your sector 

To help you decide if it’s worth branching out into the US market, it’s worth noting how your sector performs. This can provide an indication of whether there’s strong demand for your sector or a potential gap in the market if your sector isn’t already well represented.

Considering there’s no Medicare service in the US, it may come as no surprise that health-related businesses are some of the top performers. The healthcare sector is one of the biggest in the country, with pharmaceuticals, health and medical insurance and hospitals all major sub-sectors. 

Finance and insurance is also a top performer. The US is famous for Wall Street in New York and major finance companies like JP Morgan Chase and Morgan Stanley. As well as health insurance, life insurance is a major sector, as are retirement and pension plans.

Manufacturing is a significant industry in the US. Non-durable manufacturing is a major industry and covers products with a lifespan of a few years or less like clothes, drinks, oil and gas. Durable manufacturing is also big and includes the creation of long-lasting items like cars and household appliances.

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Instantly enter the market with a marketplace

If you sell goods rather than services then you can quickly enter the US market through one of their leading online marketplaces. Like in Australia, Amazon and eBay are top performers, but there are some more uniquely American marketplaces that are well worth looking into.

Wallmart.com is one of the most popular marketplaces in the US and you can apply online to sell your products on the platform. Like the huge physical stores, Wallmart.com sells a vast range of household items, so there’s a good chance it will be a fit for your products. As you’d expect from such a well-known brand, this marketplace reaches millions of customers every month, providing a huge potential audience for your products.

Overstock.com is another major US marketplace where you can apply online to sell on the platform. As well as smaller household items, Overstock.com sells furniture and rugs, jewellery and clothing. It also offers sporting goods, electronics and beauty items so there’s a wide-range of categories to fit your products.  

Find your ideal stateside location 

If you need a store, office or factory then finding the right location is never more important than in a country as huge as the US. To help kick start your research here’s a summary of some of the most popular business locations.

New York could be a great option for you if you need high-value customers, a highly skilled workforce and strong links to Australia. As well as the wealthy elite of Manhattan, New York has some of the most prestigious universities in the US and flights back to London are around 7.5 hours compared to over 10 hours from the west coast.  

The balance of city and coastal life makes Los Angeles an appealing place to live and work. As well as the glitz of Hollywood, LA’s cultural life includes renowned art galleries, museums and concert venues. LA is big into fashion too, with LA County being the number one in America for apparel manufacturing. Companies with headquarters in LA include Disney, Mattel and Blizzard gaming.  

Seattle may not be the first stateside city you think of for business, but there are some heavy hitters there. Businesses with headquarters in the Seattle metro area include Amazon, Starbucks, Microsoft and Nordstrom. So if you fancy a skyscraper office nestled in among industry giants, Seattle could be the base for you.  

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Vanessa Barlow

Experience: 13 years writing about international trade, business, finance and technology
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