Expanding your tech company into the U.S. market is an exciting opportunity for growth, but it requires meticulous planning and strategic decision-making. By following this checklist, you can mitigate risks and set your company up for success.
Published: March 08, 2024
Updated: March 08, 2024
The U.S. market holds great potential for growth and recognition. Given the market size of the U.S. in comparison to Canada, it's often a necessary path to growth for Canadian technology companies.
However, crossing international borders can be a complex and challenging proposition. To succeed, you must understand the intricacies of the U.S. business landscape and take steps to ensure that your business is set up correctly. Failure to do so can have serious repercussions that can delay or, worse, derail your expansion plans.
The following is a list of important factors for founders to consider when entering the U.S. market:
To get your expansion right, consider the tax implications of doing business in the U.S., regardless of the corporate structure, and long before you register your first sale.
Tie tax planning into your business model from the start, as tax has a big impact on your bottom line and business model.
The bad news: once the basic model is established, it's hard to change.
The good news: you can fix this now before it becomes an issue.
Any U.S. expansion needs to include a well-thought-out business plan. Before embarking on your journey, ask yourself some basic questions:
- What is my expansion strategy?
- What kind of financing will I need, and at what stages?
- In terms of business operations, what activities will happen in the U.S. and what will be done in Canada?
Any expansion can be divided into two categories “build” or “buy.” When expanding, companies need to weigh the pros and cons of an organic expansion versus an acquisition. The decision is not just a technical detail but a strategically critical point that can help your company fine-tune its approach and set yourself up for success.
If expanding organically, ask:
- Have I gathered enough intelligence about the local markets I want to enter?
- What metrics will I use to analyze the potential opportunities?
- What's the right business model to help me succeed?
If acquiring a business, ask:
- Am I buying assets or shares?
- How long will it take to finalize the purchase?
- How big is the entity I am buying relative to my existing Canadian operations?
- Have I considered whether due diligence procedures should be performed?
Recent events show how dramatically the business environment can change—and in short order. Choices made today regarding corporate structure may need to be adjusted in the future.
The best formula is to protect your options but also maintain flexibility for the future. What worked five to 10 years ago may no longer apply now. Undertake a periodic review to ensure that your company is onside of all relevant rules and regulations.