One of the best times to think about a Direct EB-5 business plan is before you have actually chosen the business.
Unfortunately, that is not always when investors come to us.
Sometimes an investor has already spent months looking for the right opportunity. They find a business they like, review the purchase price, speak with the seller, and start imagining themselves running it. Then, somewhere along the way, the immigration requirements enter the conversation.
Now the question becomes: can we make this business work for Direct EB-5?
We would rather ask that question much earlier.
Direct EB-5 is unusual because the investor isn't simply evaluating whether a business is a good investment. The business also has to work within a very specific immigration framework. Among the requirements, an EB-5 investment must create at least 10 full-time positions for qualifying U.S. workers. For a Direct EB-5 investment outside the Regional Center Program, those jobs generally must be created directly by the new commercial enterprise.
That can completely change how you look at a potential business.
Consider an investor comparing two opportunities.
The first is a highly profitable consulting company with low overhead and three employees. The second is an operating business with lower margins but a business model that naturally requires a larger team.
If we were looking only at profitability, the consulting company might immediately appear more attractive.
For Direct EB-5, however, we need to look further.
How would the consulting company realistically grow to support the required employment? What would those additional employees actually do? How much additional revenue would be needed to support their salaries? Would hiring them make business sense, or would we simply be adding positions to satisfy an immigration requirement?
Those questions are much easier to ask before you buy the business.
At Visa Business Plans, this is where our work can begin well before we write the final EB-5 business plan. Our Direct EB-5 plans are built around the relationship between the investment, the operation of the business and the creation of the required jobs. They include detailed staffing, revenue and profit-and-loss projections with the assumptions behind them.
That analysis can reveal things an investor may not see when initially evaluating an opportunity.
Let’s say you’re considering a restaurant. Restaurants can naturally require a substantial number of employees, which may initially make the business look attractive for Direct EB-5.
But having a labor-intensive business doesn’t solve everything.
Those employees have to be paid. So we also need to understand how much revenue the restaurant can realistically generate, what its food and labor costs may look like, how much cash will be needed while the restaurant builds its customer base and whether the business can support the proposed staffing while remaining financially viable.
A different investor may be looking at a daycare, retail operation, franchise or service company. Each business has a different relationship between revenue and employment.
That’s why we don’t think an investor should begin with a list of industries that are supposedly “good for EB-5.”
We would rather understand the actual business.
If it’s an existing company, we can look at its historical performance and current staffing. If it’s a new operation, we can examine the business model, expected revenue, operating costs and hiring needs. Then we can begin to see whether the employment plan grows naturally out of the business or whether we’re trying to force the business to fit the immigration strategy.
This matters even more when the jobs have not yet been created. USCIS regulations contemplate the use of a comprehensive business plan to demonstrate the need for the required employees, including the approximate timing of the hiring. USCIS decisions also emphasize that the plan must be detailed enough to allow reasonable conclusions about the business’s job-creation potential.
In other words, ten boxes on an organizational chart aren’t enough.
There needs to be a business behind them.
At Visa Business Plans, we have prepared Direct EB-5 plans across many industries, and one of the advantages of getting involved early is that we can look at the opportunity from a business perspective before the investor has committed significant capital.
We are not immigration attorneys, so the legal strategy belongs with the investor’s immigration counsel. Our role is different. We analyze the business, develop the operational and financial plan, and work with the attorney so that the business strategy and immigration strategy support each other.
For an entrepreneur considering Direct EB-5, that can be an important distinction.
You don’t want to spend $800,000 or more on a business and only afterward discover that creating the required jobs doesn’t make financial or operational sense.
Choose a business you believe in.
Just make sure it also makes sense for what you’re trying to accomplish through Direct EB-5.
Contact us today to get startedThe 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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