How to Set Up Your U.S. Office

There are big opportunities for Canadian businesses in the U.S. Seizing them, however, requires much more than just hanging out a shingle. Follow one successful CEO’s inside advice

 
Written by David Pimentel

Six years ago, Mark Rowan saw an enormous opportunity. But there was a hitch: that opportunity was going to play out in another country.

The president and CEO of Stream Integration, an Ottawa-based IT consultancy, watched the U.S. market for almost a decade as IT giants like IBM and HP consolidated the enterprise software space, buying out niche developers responsible for the IT infrastructure behind mountainous volumes of corporate data. As those companies were swallowed up, so were their consulting divisions.

“That meant that customers were losing the power of choice,” says Rowan. “Consulting hourly rates were going through the roof.” And that left some big-name clients—which were used to getting a certain level of accommodation from their software providers—in the hands of corporate behemoths that would not be so accommodating.

Enter Stream Integration. It was then and there, in 2007, that Rowan and his partners decided that their company would shift its focus away from Canada and swoop into the U.S. market to offer the consulting rates—and all the tender loving care—that potential clients had come to expect.

The strategy has proven to be hugely successful. In 2008, Stream Integration’s export revenue was negligible and the company employed 15 people. Since then, the company has grown tenfold. Stream Integration now draws 63% of its revenue from exports and employs almost 150 people.

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Ultimately, what Rowan did was simple: he saw explosive growth potential south of the border, then he positioned his company to take advantage. Executing on that strategy, however, wasn’t completely straightforward, and the CEO of Stream Integration learned some key lessons along the way:

  • Be American: Big corporations in the U.S. don’t want the legal hassle of dealing with a Canadian entity. One of the first things Stream Integration did was incorporate a subsidiary in New York. The parent company remained in Ottawa and employees are Canadian, but contracts are held by the New York entity. “Once we had that established, we had the legal presence to be able to market ourselves as a U.S. entity,” says Rowan. “That gave us the foothold: €˜Are you a U.S. company?’ Yes. €˜Where are you located?’ New York City.”
  • Be strategic in your marketing: The U.S. market is too big for most companies to launch coast-to-coast marketing campaigns. Rather, promotional activities should be methodical and targeted. Stream Integration conducted extensive research to learn where in the U.S. its target industry segments were strongest. Separate marketing strategies for each segment (such as financial services or consumer retail) were created. Moreover, the company marketed directly to the top decision-makers at prospective client companies.
  • Become a name-dropper: Stream Integration also used the global brands of partners and clients as leverage to establish its business as a truly American player. It helped, for instance, that the company was reselling IBM software. One of Stream Integration’s first U.S. clients, meanwhile, was the Hilton hotel chain, which led to other “foundation customers,” such as Boeing, McDonald’s and Wells Fargo. Says Rowan: “These were organizations that embraced our presence in the marketplace and allowed us to gain a significant foothold and grow the business around those brands.”
  • Do the trade show circuit: Getting to know the trade shows in any new market and building a strong presence there is imperative, says Rowan. For Stream Integration, that means ensuring the company gets plenty of exposure at the IBM Information on Demand conference in Las Vegas, at which 13,000 potential clients and partners are in attendance annually. “It’s a major investment for us every year,” says Rowan.

  • Understand work visas: “We move people back and forth across the border on a very regular basis, every single week,” says Rowan. “And that’s not always easy to do. You have to know a lot about the legal issues and the challenges associated with doing that.” For example, Stream Integration needs employees to continually apply for temporary work visas with minimum hassle—and that requires a thorough understanding of international treaties such as NAFTA.
  • Learn the laws of the state you are working in: Entrepreneurs entering the U.S. market need to understand that laws and taxation can differ drastically from state to state. As Rowan says, “Doing business in Florida and doing business in New York City are completely different.” So, you need to hire lawyers well versed in the laws that are specific to the states in which you want to do business. In the end, business owners need to realize that the U.S. is not just one jurisdiction; it is a multiplicity of jurisdictions—each with its own quirks.
  • Every country is different: Although Stream Integration has enjoyed tremendous success in exporting consulting services to the U.S. market, Rowan knows that the same strategy won’t be applicable everywhere. Entrepreneurs shouldn’t assume that legal and tax requirements in one new region will be similar to another. Creating a legal entity in the U.K., for instance, proved to be a nightmare. “A country as sophisticated as the U.K., you would anticipate that to be a fairly easy process,” says Rowan. “It took nine months!

As the big data explosion spreads around the world, Stream Integration has set its sights beyond the U.S. market. Now established in the U.S.—and with a foothold in the U.K.—the company is in the initial stages of a global expansion. Stream Integration has acquired customers in the Netherlands, Sweden and Denmark. The company also is investigating some “low-hanging fruit” in Brazil.

Rowan is being careful, though: “The way we’re doing it is we’re leveraging local partners to help advise and guide, as opposed to us landing people on the ground, putting out a shingle and saying, €˜Hey, we’re in business!'”

Originally appeared on PROFITguide.com

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