Mistakes to Avoid When Starting a Business in the US

Published on October 22, 2025 and written by Cyril Jarnias

Starting a business in the United States is an exciting adventure, but one filled with obstacles for foreign entrepreneurs. The American market, while promising, can prove ruthless for those who are not adequately prepared. Here is a comprehensive guide to common mistakes to avoid and strategies to adopt to maximize your chances of success across the Atlantic.

A Flawed Business Plan: The Achilles’ Heel of Startups

One of the most frequent and costly mistakes is launching without adequate planning. In the United States, the business plan is not just a formality; it’s the cornerstone of your entrepreneurial project. A solid business plan is your best asset for convincing investors, partners, and financial institutions.

Too often, entrepreneurs underestimate the importance of thorough market research. The American market is vast and diverse, requiring a deep understanding of regional specifics, consumer habits, and local competition. Don’t just transpose your European business model; adapt it to the realities of the American landscape.

Another crucial aspect often overlooked is realistic financial projection. Setup and operating costs in the United States can be significantly higher than anticipated. Plan for a comfortable safety margin to handle unforeseen events and longer-than-expected timelines to reach profitability.

Financial Management: Don’t Play the Sorcerer’s Apprentice

Poor financial management is a major pitfall for many foreign companies establishing themselves in the United States. The American tax system is complex, with specificities at the federal, state, and sometimes even local levels. A calculation error or lack of knowledge about tax obligations can quickly turn into an administrative and financial nightmare.

Tax planning must be at the heart of your strategy from the start. Consult international tax experts to structure your company optimally. For example, the choice between an LLC (Limited Liability Company) and a Corporation will have significant implications for taxation and legal liability.

Another crucial aspect is cash flow management. Payment cycles in the United States can be longer than in Europe, which can strain your working capital if you are not prepared. Establish detailed cash flow forecasts and consider flexible financing solutions to address potential delays.

Don’t forget the importance of a robust accounting system either. American accounting standards (US GAAP) differ from international standards (IFRS). Invest in suitable accounting software and train yourself or hire an accountant familiar with American requirements.

The Regulatory Maze: Don’t Get Lost Along the Way

Neglecting regulations is a fatal mistake for many foreign companies in the United States. The American legal framework is complex and varies considerably from state to state. What is legal in one state may be prohibited in another, and penalties for non-compliance can be severe.

Start by familiarizing yourself with federal requirements. This includes obtaining an Employer Identification Number (EIN), complying with employment laws, personal data protection (notably the CCPA in California, equivalent to the European GDPR), and regulations specific to your industry.

At the state level, each state has its own rules regarding business licenses and permits. For example, in California, almost all businesses must obtain a business license, while in Texas, requirements vary by type of activity. Don’t assume your business is exempt; systematically check local obligations.

Don’t forget local regulations at the city or county level either. These can concern zoning, signage, or even opening hours. Thorough due diligence is essential before choosing your business location.

• Consult a lawyer specializing in international business law
• Join professional associations in your sector to stay informed of regulatory changes
• Implement a legal monitoring system to anticipate legislative changes

Competition: Underestimate It at Your Own Peril

A classic mistake of foreign entrepreneurs is to underestimate the competition in the American market. This market is one of the most competitive in the world, with well-established local players and already implanted international competitors.

Before launching, conduct a thorough competitive analysis. Identify not only your direct competitors but also potential substitutes and new entrants. Study their strengths, weaknesses, marketing strategies, and positioning. This knowledge will allow you to refine your value proposition and differentiate yourself effectively.

Remember that competition in the United States can come from innovative startups capable of quickly disrupting an established market. Stay alert to technological trends and new business models that could impact your sector.

Execution speed is crucial in the American market. Innovation cycles are fast, and consumers expect constant improvements. Prepare to iterate your offering quickly and adapt your strategy based on market feedback.

• Use competitive intelligence tools to track your competitors’ evolution
• Participate in industry trade shows to stay updated on innovations
• Cultivate a local network to get first-hand information about your market

Prevention Strategies: Your Shield Against Failure

To maximize your chances of success in the United States, it is crucial to implement effective prevention strategies. These strategies will help you anticipate challenges and react quickly to the inevitable obstacles you will encounter.

Build a Strong Network

Networking is an essential skill in the United States. Actively cultivate your professional network by participating in industry events, joining professional associations, and getting involved in the local community. A strong network can open doors, provide valuable information, and help you overcome obstacles.

Invest in Human Capital

Recruiting and retaining talent are major challenges in the United States. Invest in a human resources strategy adapted to the local market. This may include competitive compensation packages, ongoing training programs, and an attractive corporate culture for American employees.

Adopt an Agile Approach

Flexibility is an indispensable quality in the American market. Be ready to pivot quickly if your initial strategy doesn’t work as planned. Implement agile decision-making processes and continuous feedback mechanisms to stay aligned with market developments.

Master Intercultural Communication

Don’t underestimate the importance of cultural differences in business. Communication styles, customer service expectations, and negotiation practices can vary considerably between Europe and the United States. Train yourself and your team in intercultural communication to avoid costly misunderstandings.

Plan Your Exit Strategy

As paradoxical as it may seem, planning your exit strategy from the start can help you make better strategic decisions. Whether you aim for an IPO, an acquisition, or a family transfer, having a clear vision of your long-term goal will guide your choices and reassure potential investors.

In conclusion, successfully establishing yourself in the United States requires meticulous preparation, constant vigilance, and rapid adaptability. By avoiding these common mistakes and implementing effective prevention strategies, you will significantly increase your chances of success in this dynamic but demanding market.