The Story of Failures, or Why Business in America Fails

The legends about the exceptional opportunities for business development in the USA have a real basis. But only when a person who has decided to open their own business in America clearly knows what type of product or service is in demand, what the realities of doing business are, and what the peculiarities of working with local employees are.

Are you ready to start your business in a way that you don't fall and get back up again, but rather move steadily and methodically toward success? Are you ready to learn from others' mistakes instead of your own? If so, we are ready to share the most common misconceptions that lead to failure. To date, we have accumulated a wealth of statistical data and developed our own experience in running our business and supporting others, so our recommendations are not just words, but lessons learned from other entrepreneurs' mistakes that should not be repeated.

Reasons for Concept Failures

As for the statistics, the numbers look quite unpromising: out of three registered companies, two never start operating, and out of three that do start, only one achieves any success.

A careful analysis of the reasons why business processes never launched showed that a large portion of new American entrepreneurs cannot conduct proper market analysis and assess startup prospects. But there are other reasons why businesses were never launched:

• registration of a company in the USA just in case - as a backup;
• a common misconception that a company registered in the USA provides an opportunity to obtain a visa to the country, which is not true;
• attempting to transfer financial resources and streams to the USA. Such ideas are often unfeasible;
• registration of a company under a concept that, upon closer examination, turned out to be utopian, unfeasible, or unprofitable;
• breach of agreements by investors who promised funding but never delivered;
• disagreement within the team, where members could not reach a consensus on key issues;
• attempting to copy a successful business without understanding the nuances of organizing it.

If you have had thoughts similar to the above, leave them behind and try to reformat your approach, basing it on a realistic concept, and consider our notes to avoid failures at the startup stage.

Reasons for Startup Failures

This happens often: the idea seems great, the experience seems adequate, and the funds are available, but something goes wrong, and the prospect of success remains elusive. Our years of practical experience working with "new Americans"—immigrants from the former USSR—have allowed our company to identify the obstacles that lead to the failure of already launched businesses.

Team. This is a very important condition, the essence of which lies in having that same unified spirit that is present only in a thoughtfully assembled team of employees. When hiring personnel, one should not be guided by principles of regional affinity, nepotism, or selecting people from one’s circle of acquaintances. These people may be great as individuals, but not as professionals, or may lack the potential for learning, development, teamwork skills, etc.

If you have sacrificed common sense and hired such people, incorporating them into a team of like-minded individuals, do not expect any result from them other than negative outcomes: inefficiency, irresponsibility, inactivity, illiteracy, and many other similar "nons," which eventually impact the financial state or image of the company. And failure is almost inevitable if timely measures are not taken, the nature of which you can already guess—dismissal, restructuring the team.

A business oriented toward a different mentality. By this term, we mean a situation where an entrepreneur in the USA tries to replicate the success of a business started in their home country. Unfortunately, a technical transfer of business usually turns out to be a losing venture, as the realities of life in America—mentality, demand, feasibility, and even the market—are not taken into account.

The most vivid example of this approach is the attempt to organize a retail chain consisting of kiosks or stalls. But in the USA, there is no need or culture for trading through small wholesale points—newspaper stands, vegetable stands, those selling bread, pastries, shawarma, ice cream, kvass, or beer. They simply do not exist in American cities. It is very difficult for someone who successfully operated such a business in Kazakhstan, Ukraine, or Uzbekistan to understand the mentality of citizens who somehow lived and will continue to live without kiosks, refrigerators, and barrels.

Opening a photo service for documents would also be a failed idea because you can get a photo for documents… at any pharmacy.

Therefore, it is crucial to conduct basic market research before launching an idea and to simply get acquainted with the traditions and habits of the local population.

Trade in counterfeit brands or low-quality products. What often works in the post-Soviet space is completely impossible in the United States, where such business concepts are criminal offenses. Therefore, do not purchase "branded" products of Chinese provincial quality to sell them in the States. Copyright infringement and deception (or deliberate misleading) of customers are very serious crimes in the U.S. The mildest outcome for a failed entrepreneur is the closure of all sales points.

By the way, this rule also applies to the sale of generics, that is, drugs whose active ingredient is identical to the patented one. In the U.S., manufacturers of original drugs monitor the emergence of generics on the market, and the law is always on their side, so such a business may last only 2-3 months at most.

Russian-style business. This seems like an opportunity to launch a successful business that worked in the post-Soviet space. But, as with the kiosks, the entrepreneur will face failure. An example of this can be the attempt to organize networks similar to "Euroset" or "Svyaznoy," where hundreds of models of mobile phones and smartphones are sold. However, in the U.S., such a startup will not succeed due to a different mentality and lack of an economic base.

Why? Because here, no one changes phones every three months, despite the rapid generational change. Moreover, smartphones and mobile gadgets are sold by mobile operators, so phones are often given to users for free or for very nominal sums upon signing a contract. For example, last year's "Apple" models are given to contractors for free, while new ones cost only $99-$199.

A similar issue awaits those who suddenly remember the existence of payment kiosks: they are relatively convenient in Kazakhstan and Ukraine but completely uninteresting for American citizens, who pay for all goods and services directly from bank accounts or using cards.

Inability to work in local conditions and with local staff. No matter how obvious this fact is, some entrepreneurs still remain misled. Without knowing the local rules of business, without utilizing the experience and skills of hired workers from among the country’s natives, and not fully mastering American English at an adequate level, it is impossible to build a successful business. Such a semblance of self-navigation in new business conditions, with different laws and mentalities, will be completely meaningless and ineffective.

Overconfidence. Yes, extreme confidence in one’s own abilities and acquired experience often becomes the very stones over which those who cannot or do not consider it necessary to take into account the different conditions of life and business in the U.S. stumble.

If we refer to examples of this kind, Russian restaurants that opened widely in America in the 1990s come to mind. At that time, they catered to the market: a multitude of immigrants from the USSR who had just arrived in the country or nostalgic for the past. This target audience occasionally visited such restaurants with music, dancing, invited artists, and ethnic cuisine. However, later, such establishments were forced to close because the flow of former Soviet citizens dwindled, youth quickly adapted to the environment and distanced themselves from the roots and traditions of previous generations, while the local population did not need "Russian" restaurants, even as a form of exoticism.

Ethnic restaurants are indeed interesting to Americans, but this demand heavily depends on regions, trends, and the level of adaptability to American tastes. For example, in the U.S., it is easy to find restaurants with Asian, Japanese, or Italian cuisine, but all their food has a characteristic "American" taste. If one wishes to open a restaurant with Caucasian, Uzbek, Russian, or Ukrainian cuisine, they should do so with consideration of the local population's taste preferences.

“Frames” in choosing a business concept. Entrepreneurs who come to us for consultation or services often make the same mistake by trying to start businesses in construction, open gas stations, or restaurants. After receiving a list of difficulties associated with running such businesses in America, they attempt to switch to retail stores or pharmacies. But there are already plenty of those in the U.S.

What should they do? Of course, coming up with and implementing an original idea is very challenging, but this is the path that is most likely to lead to success. Potentially successful businesses include technological, service, and software products. Moreover, anything new, something that does not yet exist in the U.S., can be considered. Additionally, from start to finish, a new business will help establish your own market rules and eliminate competition.

Summary

Summarizing the reasons for failures when launching a business, we can draw the following important conclusions:

• Only an "American" project aimed at local residents, taking into account their tastes, traditions, habits, and mentality, will be successful. Purely Kazakhstani, Ukrainian, Georgian, and other types of businesses will not work here;
• Involving American specialists and forming a balanced team is the foundation for successful startup and development;
• Originality, but not utopian concepts, will allow occupying winning positions in the market of goods and services without huge expenses on competitive battles;
• It is worthwhile to offer original services and products without attempting to imitate something already well known or branded. At the same time, it should be noted that for Americans, the level of service is very important, while prices are relatively secondary.

Our company clearly sees all the problems faced by new American citizens and entrepreneurs. Moreover, we know how to find acceptable solutions for all those who wish to live and work in America, developing their business. We provide the opportunity to find your place without making detrimental mistakes. Just trust us and rely on our experience.