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FOUR
POWER TIPS FOR MANAGING THE NEWCOMER BUSINESS
(Special
Ideas for L-1 and E-2 Visa Businesses)
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The information in this
section includes tips and tactics for you to run
your business which is dependent on permission
from the Immigration and Naturalization Service.
Please check any information in this section with
your Immigration Attorney before acting on it.
The L-1 and E-2 Visas are
temporary and require renewal. At the time of
renewal it is essential that the corporation look
as good as possible, especially if the US Corporation
is a “start-up business.”
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I. THE
BUSINESS PLAN
Get organized
All
experts agree that a Business Plan is an important tool
for any business. It forces management to clearly outline
their objectives and strategies. It is an essential
tool for newcomer businesses.
Check your foreign
thinking
Every country has a different
business-culture. The factors that create the business-culture
include competition, the legal system, per capita income
and spending, media advertising, national holidays,
public morality, technology, reliability of communication,
and education of the population. These are just a few
factors that impact a business-culture.
The business-culture in
the United States, like in any other country,
is unique. Marketing, sales, distribution, management
and customer relations systems and techniques
that were highly effective in a foreign country
may be inappropriate for the United States market.
A Business Plan allows you to
approach United States businesspeople for input and
advice in an organized manner. They can see
how you have evaluated the opportunity, the competition,
the market and costs. They will quickly see any flaws
in your plan that you may have missed because you misunderstood
the American business culture.
Without a business plan, you cannot
focus your thoughts and ideas in an organized way.
Your explanations to an advisor will be vague. The
advice you receive will be equally as vague. While it
is not essential to submit a detailed Business Plan,
it certainly shows that you know where you wish to go
with your business.
Looking
good to the INS - The INS and State Department want
to know how management will develop and direct the business.
While many L-1 and E-2 Petitions briefly sketch this
in a cover letter, a Business Plan shows that serious
thought has been given to the business. This results
in the INS giving serious thought to your visa request.
Components
of a business plan:
1.
Introduction
A
summary of your business and its key elements.
2. Organization Structure
What is the legal form of the business (sole proprietorship,
partnership, or corporation), the degree of ownership,
key executives’ experience, and the management
and decision-making structure in which they will work?
3. Product or Service Description
What
is the nature of your product or service? What makes
it special? If production is involved, what engineering
or design support will be needed? Will the product
parts be manufactured or bought from outside sources
and then assembled? How will your product be produced,
packaged and delivered?
4. Location
Describe the location and features, such as traffic
patterns, parking availability, and accessibility to
customers, vendors or suppliers. Describe the building
and the lease.
5. Market Analysis
The
market should be analyzed and described. Who will be
your customers and how many will you have? Are they
close to your business location? What are their ages,
lifestyle, family structure, disposable income and purchasing
habits? What share of the market will you be able to
capture?
6. Competitors
Who
are your competition, where are they, what types of
products and services do they provide? Are they profitable?
What are their strengths and weaknesses?
7. Elaborate on the industry
Its
size, outlook, principal markets, and major characteristics.
A trade association would be helpful in providing
this information.
8. Distribution and marketing strategy
How will your product/service reach the market?
How will you reach your customers and what kind
of advertising will be used? What will your pricing
policy be?
9. Financial analysis
The financial analysis section of your business plan
must realistically and critically evaluate the profitability
of your venture. Start with all your key assumptions
regarding wages and benefits, pricing, production costs,
sales volume, market projections and inflation.
10. Project a budget
Itemizing
average total expenses per month. Then make income
and cash flow projections as well as weekly, monthly
and yearly performance measurements. Next, the expense
for setting up shop must be accurately computed. Adequate
funding must allow for the following expenses:
- Down payment on
purchase, or deposit for lease, of business premises.
- Fixture
or remodeling costs, purchase or lease of equipment.
- Initial
inventory purchases, employee training.
- Telephone
and utility installation fees and deposits.
- Image
or logo costs, stationery and supply costs.
- Purchase
of bookkeeping system (invoices, order forms, etc.)
- Special
licenses, taxes, and permit fees.
- Professional
services (accountant, attorney, consultant).
- Advertising
and promotion, travel expenses.
- Prepaid
insurance premiums.
- Trade
association membership dues.
- Deposit
for Board of Equalization (sales taxes).
Since
operating costs, such as wages, must be covered until
the business shows a profit, enough funds should be
available to cover the first twelve months of operation
plus a cash reserve for emergencies.
To
help develop your business plan and analyze
the feasibility of your venture, consult with
the nearest Chamber of Commerce, Emerging Business Center.
II. FREE ADVICE FROM EXPERTS
SCORE (Service Corps of Retired Executives)
(www.score.org),
a service of the Small Business Administration,
provides free advice from retired business executives
to small businesses. A clear and concise Business
Plan allows a retired executive to get a complete
overview of your vision of your business.
- It
saves time
- Allows
your SCORE mentor to point your misunderstandings;
- You
get strategies you omitted in your Business Plan;
- You
are given contact addresses and telephone numbers
to move forward.
III. KEEPING
A GOOD APPEARANCE FOR THE INS
The
definition of “Manager” in L-1 Visas and
E-2 Visas envisages one of two situations:
- A
person managing the business or department through
various tiers of managers and supervisors. This
manager spends a good portion of the day only managing
other people; or
- A
functional manager who is entrusted with all policy
decisions of a particular department in the business.
1)
Employ people - Many small businesses can operate
effectively without staff. However, if it is possible
to directly employ people, do so. It looks good.
While you would be responsible for Social Security
contributions as well as Worker’s’ Compensation
Insurance, these additional expenses can be regarded
as the cost of doing business as a foreign entity
in the United States.
2)
Independent contractors - While independent contractors
eliminate the tax requirements associated with employees,
they do not give the corporation the same appearnce
to the INS as employees. They can be persuasive in
showing the activities of the corporation. While
the Immigration and Naturalization Service wants to
see employees, there is much to be said for showing
that there is indirect employment through independent
contracting.
Contracts
with independent contractors can be submitted with
Petitions to the Immigration and Naturalization Service.
If
an association with an independent contractor is extremely
close and each business is integrated with the other,
consideration should be given to establishing a separate
business entity. It could be a subsidiary of your
United States business, or a joint venture with the
independent contractor.
IV.
ACCOUNTING – A GOOD TAX RETURN
Banks
and the Immigration and Naturalization Service are
concerned with the “bottom line” of a corporation
- your profit can be eliminated through depreciation
and expenses showing that the corporation is running
at a loss. An impressive tax return can be important
to a newcomer who is trying to develop a credit and
earning record to finance a home or the business
You
should balance the importance of taking deductions
for depreciation/expenses and paying less or no taxes
against the importance of renewing Visas or getting
credit. It is not a crime to pay more tax than is
due. This could be the price to pay to have a more
impressive tax return.
Immigration
attorneys often come into conflict with certified
public accountants (CPA's) when tax time comes around.
The CPA automatically wants to take every conceivable
deduction to minimize or eliminate any tax obligation.
Your cash flow may look good, but you could have eliminated
profits which are important to the INS. The Immigration
attorney, on the other hand, is looking for a good
bottom line. To impress the INS you should ensure
that your attorney and CPA are working toward the
same goal.
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