Many people have dreams of starting their own business. They believe it can give them more control over their time and money compared to working for a big company. While starting a new business from scratch is one option, another appealing choice is to buy a business that is already up and running. Choosing to purchase a successful operating business can be a smart decision for several good reasons.
Deciding to buy a business that’s doing well means you’ll have money coming in right away. It also avoids the challenges of starting a new business from the beginning. You won’t have to deal with tasks like finding suppliers, hiring employees, or getting the necessary equipment. Plus, the business already has customers, so you won’t need to do as much advertising as you would for a brand-new business. The groundwork for success is already in place.
For those considering this path, the idea of buying a business in the United States is likely appealing, as the USA. is known for supporting entrepreneurs. However, a question comes up of how to buy a business in America if you are not an American citizen or resident. The thing is, you can do it but there are some specific details to think about.
Advantages of launching your business in the USA
When thinking about which country to buy a business in, you have lots of choices around the world. But what makes the United States special? There are many good reasons why starting your business in the USA could be a great idea.
Throughout history, the USA has maintained a strong economy. Moreover, the nation exhibited a swift recovery following the COVID-19 pandemic, rebounding more rapidly than certain other countries. This was attributed to fewer extensive lockdowns (in contrast to certain European nations where various businesses faced prolonged closures) and rapid vaccine distribution. Looking forward, the economy of the USA is poised for further expansion.
With a population of approximately 334 million, the USA boasts a substantial and steadily growing workforce. The nation is home to some of the world’s top colleges and universities, offering a consistent supply of motivated and talented graduates each year.
The land of entrepreneurs, the USA has earned this reputation for good reason. Pioneers like Jeff Bezos, Steve Jobs, and Mark Zuckerberg come from here. The nation’s environment largely embraces startups and small businesses, fostering a culture that champions entrepreneurial thinking.
Both smaller businesses and larger corporations find a supportive climate in the USA. Government bodies such as the Small Business Administration extend substantial guidance and practical assistance, including grants. Notably, during the COVID-19 pandemic, the government introduced various benefits to aid businesses, ranging from tax credits to initiatives like the Paycheck Protection Program.
Business taxes in the USA tend to be lower compared to many other countries, although specifics can vary by state. On average, small businesses contend with approximately 19.8% in taxes. To provide context, this stands in contrast to other developed Western nations like France (28%), Portugal (31%), or Germany (30%). Mind though rates can significantly differ among states.
Things to be aware of when considering a business purchase in the USA
While purchasing a business in the USA can offer numerous benefits, there are also several potential downsides or cons to consider:
Buying a business, especially if it’s struggling or in a competitive industry, comes with financial risk. There’s a chance that the business might not perform as well as anticipated, leading to potential financial losses.
If you’re not familiar with the U.S. market and its culture, you might face challenges in understanding customer preferences, local business practices, and market trends. Adapting to these differences can be time-consuming and might require additional resources.
The USA has a complex legal and regulatory environment that varies from state to state. Navigating these complexities, especially as a foreigner, can be challenging. In this situation, it is crucial to ensure compliance with labor laws, taxes, and business regulations.
Depending on the industry and location, you might face stiff competition from established businesses. Standing out and gaining a competitive edge can be difficult, especially if the market is saturated.
It can be challenging to manage a workforce, especially if you’re not familiar with employment laws in the USA. Hiring, firing, and maintaining employee satisfaction while adhering to labor legislation is a complex issue.
It is not an easy thing to adapt to a new culture and the way of doing business there. Communication styles, business etiquette, and customer behaviors might be different from what you’re used to.
There could be hidden financial or legal liabilities associated with the business that you’re not aware of during the due diligence phase. These can become significant burdens after the purchase.
If you’re not planning to be actively involved in the day-to-day operations of the business, you’ll need to have a solid management team in place. You should do your best to make sure the business runs smoothly without your direct oversight.
It is not at all a breeze to secure financing to buy a business, especially for foreign buyers. Access to capital, interest rates, and repayment terms may vary based on your financial history and the type of business you’re purchasing.
Managing a business, whether new or acquired, requires significant time and effort. If you’re not prepared for the demands of entrepreneurship, it could lead to burnout or underperformance.
Just as with any investment, it’s important to have an exit strategy. Selling a business in the future might be more challenging than you anticipate, and a clear plan is essential.
Before you decide to purchase a business in the USA, be sure to thoroughly research and understand these potential cons. Seeking expert advice to conduct due diligence, and carefully weigh all pros and cons is a smart idea to make an informed choice. At International Wealth, our experts are always ready to answer the trickiest questions you may have about purchasing a business in the USA. With us, your success is already booming on the horizon!
