Expansion to the US: American companies don’t care what you can do – They want to know how you’ll solve their problem | Interview

Hydra Consulting is a trusted partner to Accace for advisory and BPO services in the US, where we help European companies navigate their American expansions. Find out from our latest interview with Josef Scharfen, CEO of Hydra Consulting, what makes the US market attractive and what challenges often catch European companies off guard.

“American companies are much more direct. It’s not about showcasing your product’s features. They want to know how you will solve their problem for them,” says Josef Scharfen, CEO of Hydra Consulting.

What’s behind the name Hydra Consulting?

When I founded the company, I chose the name Hydra to reflect the versatility of our services. I wanted to create a unique one-stop-shop for companies entering the US market.

Years ago, I was importing European products to the US through my first company and back then I ran into all kinds of unexpected challenges. I learned a lot, but I also made many mistakes. Now, we help our clients avoid these same issues and make their US expansion as smooth as possible.

Whether it’s securing E2 investor visas, handling tax and HR, or even kick-starting US sales before the company physically relocates, we’re here to support each step of this journey. Many companies have started to use this approach to test the US market. It allows them to have their expenses under control and there is also no need to build a full sales team right away.

When is the right time to open a US branch?

That varies. It depends on whether you’re a manufacturing company or service provider, and of course, on your industry. For example, heavily regulated sectors such as dietary supplements or defense typically require a US entity from day one.

Another deciding factor is liability insurance. European insurance providers are often hesitant to cover US based businesses. Also, many American companies prefer working with local entities under US jurisdiction. Without having the US entity, even basic tasks like cashing a check can become a challenge. One of our clients waited months to clear a check issued to a European entity. After they started their US operation the same task was a matter of just a few days. The bottom line is that if you’re serious about expanding to the US, opening a local entity is at some point inevitable.

How important is it to choose the right state to register your company?

We always advise our clients to focus on logistics and proximity to their customers, not just tax advantages. We will figure out the tax strategy for you.

At the same time, each state has different rules and costs, but other factors should not be overlooked. Manufacturing companies often head to Ohio or Michigan, while tech, AI and startups lean toward Delaware, Texas, California or North Carolina to access talent, potential investors or key partners.

What kind of costs should companies expect when starting out in the US?

Creating the US entity is simple and affordable, usually it’s a matter of just a few hundred dollars and some paperwork depending on the state. The US has always welcomed foreign investment and entrepreneurship. With the current uncertainty regarding possible tariffs, I expect that companies will continue to eye the US market for growth. They might rethink their production and import processes, but the attraction to the US remains strong.

Considering costs, it is operations, and especially HR, where things get expensive. That said, companies that establish their US entity in a lean mode without full-time staff can keep annual operating costs under $5,000. This cost should cover the responsibilities with which the US entity is connected. Even if you have zero income, you’re still required to file a tax return. Failing to do so can result in hefty IRS penalties, despite the low setup costs.

What tax or regulatory challenges should companies prepare for?

While the US tax system is generally less bureaucratic than Europe’s, it has its own quirks. A big one is sales tax, the America’s version of Europe’s Value Added Tax (VAT), that varies from state to state.

Companies also need to properly set transfer pricing between their parent and subsidiary companies, and document everything accordingly. Another challenge is withholding taxes for foreign contractors or owners being paid by US entities. Double taxation treaties help reduce these costs, and credits can often be applied back in the home country. Our partners at Accace in Europe can assist with that.

Another area where the differences can be felt is in the hiring process. The US labor market is more flexible, but employee benefits (such as health insurance and retirement plan) play a greater role in recruiting and retention. Just because you’ve mastered hiring in Europe doesn’t mean it’ll automatically work the same way in the States.

How difficult is it to secure visas for relocating key employees?

Early on, many companies get by with ESTA or B2 visitor visas. For frequent visits or permanent relocations, we typically recommend E2 investor visas or L visas for internal employees. Some of our clients move to the US with their entire family, others travel frequently and build local teams.

We guide clients through the entire visa process – from selecting the right visa type to preparing documentation and a business plan. For E2 visas especially, success isn’t just about paperwork, it’s also about confidently selling your business vision at the embassy interview.

For E2 visas especially, success isn’t just about paperwork, it’s also about confidently selling your business vision at the embassy interview.

What cultural differences should companies expect?

American companies, especially in the B2B segment, are far more solution driven. They don’t care about every technical feature of your product; they want to know how you’re going to solve their problem.

For example, at industry fairs you need to be prepared. Knowing your potential partners, having tailored marketing materials, and being ready to clearly position yourself as a problem solver. Attending without a clear plan can be a very costly meet and greet that doesn’t produce the desired results in the expected sales or partnerships.

In the B2C segment, convenience and simplicity is above all else.

What surprises companies most when they enter the US market?

A big surprise for many is the lack of digitalization in some areas. The US is seen as a tech leader, but everyday business operations especially with authorities or banking can still involve physical paperwork, checks and post mail.

The scale of the US market is also a shock. Of course, you may be aware of it in theory, but dealing with that complexity on a day-to-day basis is something else entirely.

The scale of the US market is a shock. Of course, you may be aware of it in theory, but dealing with that complexity on a day-to-day basis is something else entirely.

And is there something that after 20 years in the US surprises you?

Honestly, next to nothing. Though, I am still occasionally struck by how open people are – both in business and personally.

I grew up in an environment where openness and strong interpersonal relationships weren’t encouraged. Now, I’m an American citizen, but I’ll always carry a different perspective from my American peers.

What drives you to help companies expand to the US?

Our clients with their incredible stories and businesses. Last year, I finally brought them together, so I organized the first USExpand networking conference in Prague. It was the perfect start to growing a community of like-minded businesses expanding into the US or having this expansion on their radar.

This fall, we’re hosting the second edition, and I can’t wait to meet everyone again in person.