When you’re preparing an E-2 application, it’s very easy to assume that bigger numbers will make the business look stronger.
If $500,000 in revenue by Year 5 looks good, maybe $1 million looks better. If three employees demonstrate growth, perhaps six will make the case even more convincing.
Before long, the business described in the plan can become much more ambitious than the business the investor actually intends to operate.
We understand how this happens. An E-2 applicant knows the business must be more than marginal, and USCIS looks at whether the enterprise has the present or future capacity to generate more than enough income to provide a minimal living for the investor and family.
The temptation is to prove that by showing aggressive growth.
But aggressive isn’t necessarily credible.
Imagine someone opening a small marketing agency. The investor expects to start with a few clients and gradually build the company through referrals and business development.
Then the business plan shows revenue tripling in the second year and a team of eight employees by Year 5.
Could that happen? Certainly.
The more important question is whether there’s a reasonable explanation for why it would happen.
At Visa Business Plans, this is where we spend a lot of time working through the assumptions behind the projections. If revenue is expected to double, we want to understand where those additional sales will come from. If the company is adding employees, we need to understand what those employees will do and whether the projected revenue can support their salaries.
One number usually affects several others.
If the marketing agency plans to serve 100 clients by Year 5, for example, we need to think about what those clients are expected to spend and how much work servicing them will require. That, in turn, affects staffing, payroll and other operating expenses.
Now the projections start telling the story of an actual business rather than simply showing an upward line on a spreadsheet.
We saw the consequences of getting this wrong with one of our own clients.
He came to us after his E-2 case had already been denied. Another company had prepared his original business plan, and by the time he contacted us, he was desperate and couldn’t understand what had happened.
Before doing anything else, we reviewed the government’s denial, his original business plan and the supporting documentation.
And we agreed with the government.
The projections in the business plan were simply too far removed from what the business had actually been doing. The plan presented extremely optimistic future numbers, while the company’s tax returns were telling a very different story.
That disconnect couldn’t simply be ignored.
If an existing business has historical financial information, those numbers provide important context for the projections. It doesn’t mean the future has to look exactly like the past. A new owner may have plans to expand, increase marketing, introduce new services, hire employees or make other changes that could significantly improve performance.
But then the business plan needs to explain how those changes are expected to produce the growth being projected.
That’s very different from simply putting a much larger revenue number into Year 3, Year 4 or Year 5.
This is particularly important when an investor is buying an existing business. There is already a financial history to consider. We can look at how the company has performed, understand what the new owner plans to change and build projections around a reasonable growth strategy.
The goal isn’t to take a modest business and suddenly make it look like it will become five times larger just to create a more impressive immigration business plan.
There is another practical reason to be careful with this.
The applicant may eventually have to explain these numbers.
If your business plan says you’ll generate $1.2 million in Year 5, you should understand how the plan arrived at $1.2 million. If it shows seven employees, there should be a business reason for those seven positions.
At Visa Business Plans, our job isn’t to make an E-2 business look bigger than it is.
It’s to understand what the investor is actually trying to build and develop a plan where the market, operations, staffing and financial projections support that story.
A conservative projection isn’t automatically better than an aggressive one either. Sometimes a business has very strong reasons to expect rapid growth.
The important part is being able to support it.
Your E-2 business plan doesn’t need numbers designed to impress someone.
It needs numbers that make sense.
Contact us today to get started
The information provided in this blog is intended solely for informational purposes. While we strive to offer accurate and up-to-date content, it should not be considered legal advice. Immigration laws and regulations are subject to change, and individual circumstances can vary widely. For personalized guidance and legal advice regarding your specific immigration situation, we strongly recommend consulting with a qualified immigration attorney who can provide you with tailored assistance and ensure compliance with current laws and regulations.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in four different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.
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