Getting Started in the US of A
So you’ve got a great new idea and want to put it into action? Here’s some good news to get you started: a combination of unique characteristics make the United States an ideal place for innovators and entrepreneurs to launch their ventures. The advantages reach a spectrum of business models, so no matter what your ambitions, you’re starting out in a great place.
Risk is rewarded
The United States’ business environment fosters and nurtures the growth of new businesses. Many elements of this environment are encouraging to entrepreneurs like you who are considering starting a company.
For example, legal structures in the US provide a range of options for different sizes and types of businesses, allowing their owners to take on varying levels of liability. This flexibility also creates a distinction between the individual and the corporation, further encouraging you to take business risks without fear of getting into too much serious trouble. Unless you do something illegal, or fail to make payroll taxes, you as an individual will not be held personally liable for the failure of a business.
And it’s not just US laws that reward you for taking risks. Our culture and society also reward the adventurous entrepreneur. We see it as acceptable, even courageous, to give a new venture your best shot and make lots of beginner’s mistakes, even if your business fails because of it.
The entrepreneur-friendly culture of the US tells us that making mistakes is just part of the process, and that success is all about taking the risk, and learning from your mistakes.
It’s who you know
US business culture puts a heavy emphasis on networking—making interpersonal connections and using them to your advantage. As we’ve already said, getting to know people in your field and beyond can help you immeasurably; in fact, you can’t get far without that kind of help. Establishing a relationship with a mentor can help you avoid some painful and damaging mistakes. Additionally, a person with an established reputation can open doors for you. Take every opportunity to get to know people who might have the tools to help you out.
Calculated debt is OK...mostly
Unlike many countries around the world, US culture approves the decision to borrow money to fund a new business. Getting a loan is okay, and being in debt is just fine. A few stories circulate about successful companies that launch themselves entirely on credit card debt (which, as you hopefully know, is about the worst loan deal around). Some credit card companies are even setting up special plans and incentives for the small business owner, further propagating the notion that debt carries no shame.
Of course, we hear a lot less about the failures in this approach, which are proportionally much, much greater. Be very careful about personally guaranteeing any kind of loan. You could be personally obligated for a long time to come. And remember: use full disclosure when you get any kind of financing. You don’t want to get money based on false pretenses, no matter how desperate you or your company are at the time.
Your team is ultimately responsible for the business decisions you make, for borrowing wisely, and for doing what it takes to help your company succeed. Every decision you make along the way has risks and consequences. It’s up to you to educate yourself thoroughly and decide whether they are smart and worthy risks.
A rich history of failure
Many of America’s most successful businessmen failed in early business endeavors at least once, including ketchup magnate John Henry Heinz, Henry Ford of Ford Motor Company, and Phineas Barnum, founder of the American circus. All of them eventually became very rich, in part because they were given a chance to try a business, fail, and start over.
The philosophy behind this tolerant regulatory structure is to encourage people to create businesses, with the hope that they will succeed, hire employees, pay taxes, and improve the economy as a whole. These ideas are not new. As a society, Americans have always encouraged economic activity through the extensive use of credit. As early as the 1700s, when the US economy was competing with much more developed European economies, it grew faster than anyone could have imagined, partly through extensive use of credit, with some people being paid for goods and supplies months and even years after the credit was granted. This allowed people to start businesses without much money in their pockets. The availability of credit caused economic activity to soar, and a strong credit-based economy was born.1
A kinder, gentler bankruptcy
There are two main types of bankruptcy for businesses. Some can stay in business under Chapter 11 while they reorganize their debts. Thus, unlike most bankruptcy systems around the world, US laws allow a bankrupt company to continue in operation, with the same management, while it tries to restructure its debts. In other words, typically, no trustee or custodian is appointed. Some people think this system, known as a debtor-in-possession system, promotes economic and job growth because more companies remain in business and their assets are protected. Businesses can also simply liquidate their assets under Chapter 7 and use the sale proceeds to pay creditors.
“We did not have any capital or a business plan. We did not have a marketing strategy. We did not have one damn thing. All I did was get on the phone and convince people that we were going to be a huge beverage company one day so why don’t you sell me the resources I need. Give two guys that have absolutely no credit, the credit to buy 200,000 cases of glass—and I did it. Nobody in their right mind would think they could do that.”
Tom First, Co-founder of Nantucket Nectars. From “Keynote Entrepreneurs – Nantucket Nectars,” http://www.benlore.com.
I started the magazine because I had a passion for what I was doing. That’s also why I went into the airline business, even though everybody I talked to told me that there was no money to be made there. I felt that I could make a difference. That’s the best reason to go into business—because you feel strongly that you can change things.”
Richard Branson, Chairman of the Virgin Group. From “Training to Work: Unit of One,” by Jill Rosenfeld. Fast Company, August, 2000.