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For years, the thinking around many E-2 renewals was fairly straightforward.
If the business was operating, generating revenue, employing people, and generally doing what it was supposed to do, the company’s actual results provided a strong picture of how the investment had performed.
After all, you weren’t dealing with projections anymore. You had tax returns, financial statements, payroll records, and years of actual business activity.
So why would a successful business need another business plan?
That question has been coming up more frequently at immigration conferences we’ve attended.
Attorneys from around the country are discussing increased scrutiny of E-2 renewals and, in some cases, choosing to submit updated business plans even when their clients’ companies have performed well.
At a recent AILA conference our team attended, a well-known immigration attorney shared the experience of a client whose E-2 business was successful and generally aligned with the original plan. Yet the adjudicating officer still requested a new business plan.
The officer’s reasoning caught everyone’s attention: past performance was not a guarantee of future performance. We subsequently wrote about that discussion because it reflected a broader concern we were hearing among practitioners.
It’s important to put this in context.
We are not saying that the law suddenly changed or that every E-2 renewal now requires a new business plan. The strategy for any particular case belongs with the immigration attorney.
What we are seeing, however, is that more attorneys are thinking beyond what the company has already accomplished. They also want to show where the business is going next.
From that perspective, an updated plan serves a very different purpose than the original.
Imagine an investor who opened a business five years ago.
The original business plan projected that the company would reach $1 million in revenue and hire five employees. Five years later, it has reached $1.2 million, hired the projected staff, and remained profitable.
There may be very little to explain about the past.
But what happens over the next several years?
Perhaps the owner plans to expand into another market. Maybe the company will add a service, hire additional employees or invest in new equipment. On the other hand, the business may have reached a more mature stage where revenue is expected to grow at a slower pace.
Those are things last year's financial statements cannot tell you.
USCIS materials themselves illustrate the distinction between historical and forward-looking evidence when evaluating whether an E-2 enterprise is more than marginal. Evidence can include current financial statements, tax documents showing revenue growth and payroll records, but USCIS also identifies detailed business plans with future projections and supporting evidence as potentially relevant documentation.
For us, this makes an E-2 renewal particularly interesting from a business-planning perspective.
When we prepared the original plan, we were working primarily with assumptions. We researched the market, studied the industry, talked with the investor and developed reasonable projections based on the information available at the time.
At renewal, we have much more information.
We know what the company actually sold. We can see its real expenses, margins and payroll. We know how quickly it grew and whether the original strategy worked. We can also see where the business performed differently from what everyone expected.
That gives us a much stronger starting point for developing the next set of projections.
Suppose the original plan expected the company to reach $1 million in revenue, and it reached $1.2 million. We wouldn’t simply take $1.2 million and increase it by an arbitrary percentage every year.
We would look at how the company got there.
Did revenue grow because it added customers? Increased prices? Expanded its services? Entered another market? Did the company hire as expected, or did it find a more efficient way to operate?
Once we understand what actually drove the company’s performance, we can combine that information with current industry and market data and develop projections based on the business that exists today.
This is also why an updated plan can be useful even when the company didn’t miss its original projections.
There may be nothing to defend or explain. The business may have done extremely well.
The question is simply different now.
Five years ago, the investor was explaining what he or she intended to build. Today, there is an established company with years of operating history, and the attorney may want to show how that company expects to continue developing.
At Visa Business Plans, we’re seeing this change reflected in the work attorneys are asking us to do. Renewal plans are increasingly about connecting two stories: what the business has actually accomplished and what it reasonably expects to do next.
That doesn’t mean ignoring the past. Quite the opposite. The company’s actual performance gives us information we simply didn’t have when the original plan was prepared.
We can use those real results as the starting point, then look at the company’s current strategy, today’s market and industry conditions, and what the owner realistically plans to do over the next several years.
For an E-2 business that has already proven it can operate successfully, that can make the projections going forward much more meaningful than the projections we prepared when the company was just getting started.
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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