Your first US hires: where to put them, what they cost and how to keep customers

It's called the United States and everyone speaks English, so it feels like it should be one market. It isn't, and treating it like one is how a lot of founders make their first expensive mistake.

Think of every state as its own country

All 50 states have different employment law, different tax laws and different cultures.

So if your plan for your first few employees is someone on the West Coast, someone on the East Coast and someone in the middle, there are employment solutions that let you do that. But it's like starting your business in Europe and hiring someone in the UK, someone in Portugal and someone in Germany. It's the same level of complexity.

Every state you add an employee in multiplies your complexity.

The right solutions help you manage that, but it's still worth thinking about when you're building your strategy.

Don't let your first hire pick your location

What I see with a lot of companies is that they find someone they like, hire them, and that becomes the basis of their location strategy. It's not necessarily going to work out that well.

If that person happens to live in the middle of nowhere, that's great, but then how are you going to make the second hire, the third, the fourth? How are you going to get to see your customers, and get close to your investors? You can start walking down a path that's quite hard to unwind.

For your industry, ask three things:

• Where is the talent clustered?

• Where are your customers clustered?

• Where are the investors likely to be?

Then look at:

Cost

It varies quite wildly. Put someone in California versus Texas or Florida and the salary is going to be significantly different, and so are state unemployment taxes, overtime laws and other state-specific costs. In places like New York you've got city taxes on top of federal and state. For one employee it might not seem that different, but once you've committed to a location and have five or ten people there, it starts to look very different in your budget.

Time zone

I speak from experience here. I'm about as far west as you can get and still have a reasonable crossover with Europe, and I start a lot of my days at 6am, which gets tiring when you've also got kids to get to school. San Francisco is a great place for many reasons, but managing the time zones between California and Europe is phenomenally difficult. You get a couple of hours a day, max, at the beginning of someone's day and the end of someone else's.

Travel

People significantly underestimate the scale of the US. One of our fintech clients, all based in London, made their first hire in San Francisco, with their customers in New York. You can fly London to New York in the same time it takes to go New York to San Francisco and back. They may as well have hired someone in London.

Incentives

There's a real drive at state level to attract international businesses, and there are state and local incentives that can make a significant difference to your start-up costs. There are cities that will pay you real money to hire there. Look into it before you commit to a location, and even after.

Investors and buyers

A lot of investment in the US is done in person, and it snapped back to that after COVID. Being near your potential investors and buyers is more critical than people think.

Rework your go-to-market

GTM could be several hours on its own, but a few things are quite culturally specific.

Be very clear on your ICP

‍You can get sucked into the scale of the US very easily. Nail down exactly who your ICP is, concentrate on that, and focus on where they're clustered. It'll save you a lot of time and a lot of heartache, and it helps your location strategy significantly too.

Localise your pricing

‍Pretty much everything here costs more than in the UK, not just salaries but rent and everything else. Price your business the same as at home and you're probably going to lose money. Get advice on what you can charge, so you don't come here, sell loads and still lose money.

Localise your messaging

‍The US is quite sensitive to it. If you've got S's where Z's should be, people notice. Your messaging, your contracts, everything needs to be worked through carefully and Americanised.

Get to the conferences

‍A lot of business here is done at conferences. They're expensive to get to, but your ICP and your competitors are all there at the same time. Work out which events matter to you and how often you can get to them, and put it in the budget.

Plan how you'll keep customers, not just win them

‍There's very little customer loyalty in the US. A lot of companies start onboarding customers and lose them just as quickly. When I launched a recruitment business here, we'd do multiple placements with a company and then they'd just give the jobs to someone else. We'd ask what happened. "We just wanted to try someone else." But we're doing a great job. "Yeah, you're doing a great job." It came as a shock to me. Unless you work really hard to nurture and develop the relationship, they'll go.

Hiring: it costs more and it moves faster

Depending on location, salaries are going to be between one and a half and three times higher than the UK. Then add 20 to 30% on top for employer taxes and benefits.

You can customise what you contribute to benefits, but only so much before you're not competitive. You don't want to contribute so little that it fits your budget but nobody joins or stays.

Benefits are critical here, because it's very hard to get access to healthcare any other way. Retirement matters too. A 401(k) that you contribute 3 or 4% to is actually going to save you money, because the extra salary you'd have to pay without one is significantly more than the contributions. So again, things that look expensive save you time and money in the long run.

The US is at-will, so there are no notice periods

‍Be really clear on the kind of candidates you want, be specific about what you need, and be prepared to make decisions quickly, or they'll be gone. Once someone accepts, they'll probably want to start a week out, two weeks max. It won't be a month, or three months.

Get set up before you make the offer

‍An awful lot of the clients we deal with come to us after they've made the offer, then realise they're in no way set up to employ the person. We rapidly hustle to get them onboarded. Candidly, that's great for our business, but it's terrible for the companies. They haven't had time to think through whether the hire is in the right place, or how to structure benefits and onboarding so it scales, because it's all being done for one person in one location.

Sell the mission

‍American candidates are going to want to know your vision, why you're coming to the US, and your story told in a US-friendly way. There are a lot more mission-led decisions than you'd see in the UK. They'll join a startup, but they've got to buy it and believe it. Getting your pitch right in the interview is probably more important than in the UK.

Insurance and compliance: get help and don't make mistakes

It's a dry topic, so I'll keep it short. You'll look at the insurances here and think, God, that's expensive. But if you don't get them, it's going to cost you a ton more at some point. Some of it is just mandatory.

If you're employing through a PEO, they take care of it for you. If you try to do it directly and cut corners, you miss things like workers' compensation insurance, and unfortunately ignorance isn't a defence. Make sure your liability insurance for the business is in place and adequate, too. It'll cost you up front, but it'll save you a lot. Build it into the budget, because without it you'll end up paying more.

Not ready to hire? Try a door opener

Not every business has the money to hire in the US straight away. Using someone in your industry who's based here to open doors and secure deals, on a commission, is a very valid way to test your ICP. You get feedback on what is and isn't working.

If you can find someone who's worked with European companies before, even better. There's quite a significant language barrier between the US and the UK and Europe, a lot of subtleties of communication that get missed. Someone who understands both can tell you why your business is or isn't catching on, and it could be some subtle changes that make quite a big difference.

Get your contracts right. The three things I'd look out for:

• You retain all your intellectual property.

• You keep the relationship with the customers directly.

• They invoice you for services, so you don't get sucked into a deemed employee scenario.

An agent of record can handle the classification and payments for you.

Get over here

Not necessarily to live, but the more time you spend meeting customers and in the market, the more you learn. It's really not what you see on TV or in the movies. It's very different.

If you do move, force yourself to socialise as soon as possible. I arrived here at 40 years old, and it had been a long time since I'd made friends. Unless you get out and get involved with the community, it can become a pretty lonely place pretty quickly. And dial back the sarcasm, because it doesn't go over that well here. When I moved to Texas, everyone was really nice to me all the time, and my wife had to spell it out: "All you have to do is be nice to them, Adrian. There's no hidden agenda."

And get used to selling yourself and your business. Ask everyone for help. You'll be surprised what you get, and how many people give you a chance. You can't be shy.

Work with In2America

In2America is the PEO built for international businesses making their first US hires, with no headcount minimum. We manage payroll, taxes, benefits, insurance, HR and compliance, and when a question needs a lawyer or an accountant, we'll introduce you to people we know have done a good job before.