5 essential steps for a successful U.S. expansion | BDC.ca
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5 essential steps for a successful U.S. expansion

Homework is essential because the U.S. has many different markets


Many Canadian companies are naturally drawn to the U.S. when they decide to expand internationally. After all, the American market offers lots of attractions—geographic proximity, a familiar language and culture, and a business-friendly environment.

But for too many entrepreneurs, a U.S. expansion ends in costly failure.

The U.S. can provide exciting growth opportunities for your company, but you have to be ready to take on this challenging and complex market.

Be prepared

“When companies go into the U.S., they often think doing business will be the same as in Canada,” says Marie-Elaine Beaudoin, Business Advisor, International Expansion at BDC. “But the U.S. has many different markets, and it’s a very competitive environment. So you must do your homework.”

Canadian companies that expand to the U.S. without carrying out the necessary preparations are often hamstrung by such factors as inadequate financial resources, a lack of understanding of the complexity of U.S. markets and a failure to clearly differentiate their product or service.

But, as countless Canadian companies have proven, expanding into the American market is not only possible, but can be highly lucrative when done right.

Maximize your chances of success

Beaudoin, whose team helps Canadian entrepreneurs prepare and execute international expansion strategies, offered five steps to reduce risk and maximize your chances of a smooth and successful U.S. expansion.

1. Set aside a war chest

Expanding to the U.S. may be more expensive than you think. From finding partners to marketing to logistics, it’s crucial that Canadian entrepreneurs prepare realistic financial estimates for their foray into the U.S.

“It’s important to make projections,” Beaudoin says. “Before investing too much, you need to make sure you can execute your plan in terms of finances as well as have the organizational capacity to support expansion.”

“These are important questions because when you get a contract from a U.S. company, you’ll only get one chance to deliver.”

2. Choose the right market

The United States is far from a homogenous market. Instead, it’s a patchwork of local markets with varying characteristics, including regulations, tax laws and even customer service expectations.

Research the most appropriate U.S. markets for your business and choose carefully based on such criteria as geography, competitive landscape, regulatory and tax environment, and targeted customers.

3. Differentiate your product or service

Americans are often skeptical about doing business with foreign companies, even if they’re from nearby Canada.

As Beaudoin notes, one of the biggest mistakes Canadian firms make when expanding to the U.S. is failing to properly differentiate their products or services to bring something unique to the market.

“U.S. companies will ask, ‘Why you?’” Beaudoin warns. “Why should I take risk dealing with a non-American company? That’s why you need to communicate a unique value proposition.”

4. Get help

Beaudoin recommends tapping resources both in Canada and the U.S. to assist you with your expansion efforts.

The Canadian Trade Commissioner Service (CTCS) has offices in major cities across the U.S. It works to open doors for Canadian entrepreneurs; help them understand market conditions; and connect with advisors such as reliable U.S. lawyers and accountants.

BDC’s International Expansion team offers a range of services to companies at all stages of international expansion. Export Development Canada is another source of advice and services.

In the U.S., the U.S. Chamber of Commerce and local chambers will help you learn more about your target markets and build contacts to enhance networking and business development opportunities.

5. Improve your technology

Generally, Americans are ahead of Canadian companies in using technology, Beaudoin says. Canadian companies have to up their game and use technology to do business more effectively in the U.S.

Analyze your business to see where you can use tech tools to boost sales, improve productivity and become more innovative.

“In the U.S., it’s crucial to have an online component to your business,” Beaudoin says. “But it doesn’t stop there. You have to use technology to boost efficiency, innovation and productivity to compete effectively.”