How to Do Business in the USA
The USA is one of the biggest economies in the world. With a massive 335 million+ population, the economy offers a sizeable consumer marketplace accounting for almost 20% of the global business economy. With such a large market, there is significant potential to thrive.
That said, the United States is a federal system. Each state has separate legal systems, operational procedures and regulations. The population is also a melting pot of diversity, with marked cultural differences across the country. Therefore, to succeed in the US market, it’s critical to understand how to navigate the various challenges. This guide will walk you through the nuances of the American business market.
Business culture in the USA
US business culture is generally characterised by low power distance with more informal and participative business interactions. While some attributes differ, given the vast geographical differences, there is a prevalent culture toward individualism. Accomplishments are highly valued, so they are shared when doing business in order to gain trust. Communication is also typically direct, with the emphasis on getting business done.
Top tips for doing business in the USA
Here are some considerations when doing business in the United States of America.
You can work with a licensed Customs Broker to assist you with the rates and other critical import and export requirements. You can find the list of approved brokers on the US Customs and Border Protection site.
The primary language of communication is English. However, there are some variations in the US versions of the language. Take time to review content by native US English speakers and listen to the differences.
Americans also tend to be direct communicators, so be straightforward and crystal clear. Avoid using ambiguous phrases, and don’t assume anything.
The federal system brings some complexity to the business and individual tax regime in the US. Cities, counties, states and the federal government can all impose their income taxes. There’s no Value Added Tax (VAT), but sales tax rates vary from state to state. Therefore, when exporting goods to the US, getting tailored advice is critical. Find an accountant or tax lawyer with experience in the state in which you are looking to conduct your business operations.
It’s critical to confirm that the product you want to export to the US meets the legal, licensing and standards requirements. Check the US Food and Drug Administration (FDA) legislation and regulations for food and drink, medicines and cosmetics. Labelling for consumer commodities is also enforced by the FDA. Verify the local labelling regulations with the relevant state business bureau.
Intellectual property (IP) rights are territorial. So IP rights granted in the UK don’t automatically protect you when doing business in the USA. If you need IP protection when trading in the US or selling to customers via the internet, you’ll need to file a registration with the relevant IP rights and Copyright offices. Get guidance from UK IP attachés based in UK export markets.
You can invoice and receive payments in either USD or pound sterling. If you agree with the buyers for a pound sterling invoice, you pass the risk to the buyer and don’t have to deal with exchange rate risks.
It helps to get guidance on managing your foreign exchange risks from a dedicated international payments specialist like Clear Currency to ensure you stay profitable. Learn more about mitigating foreign exchange risk here.
Insurance and product liability
UK Export Finance (UKEF) provides insurance that helps UK companies against buyer default when doing business in the US. Even if you have UK cover, you need US Product liability insurance. The US legal system follows the concept of strict liability. This means that even if you’re only a supplier, you may be held liable for any losses. Product Liability Insurance will protect you from lawsuits arising from product failure.
The US market has high levels of consumerism, which can boost your business. However, the vast country and marked differences between states mean you must tailor your marketing to the different regions. This can prove costly, especially if you expand across the entire country.
Over 70% of US consumers stand ready to switch brands, so carefully consider your marketing strategies and be prepared to pivot as necessary.
When conducting meetings, punctuality is considered necessary. Whether online or in person, you have better chances of negotiating fruitful deals if you are on time.
Use Clear Currency when doing business in the US
Clear Currency provides a fast and efficient way to send money to and from the USA. You’ll also get expert guidance to help you handle any queries you have about your exchange. Sign up for an account today.
How to Mitigate Foreign Exchange Risk
Currency risk can have a significant effect on the efficiency and profitability of any international business. Each exchange rate movement affects how much you receive from sales and what you pay to suppliers.
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