When investors first learn about Direct EB-5, the 10-job requirement often gets a lot of attention.
So when they begin thinking about the business plan, it’s tempting to start there.
We need 10 jobs. Let’s figure out which 10 positions we’re going to hire.
We prefer to approach it from the other direction.
Before deciding who the business will hire, we want to understand how it will make money and whether it can realistically support the proposed payroll.
For Direct EB-5, this is particularly important. USCIS requires creating at least 10 full-time positions for qualifying employees. When those employees have not yet been hired, the comprehensive business plan should show that the nature and projected size of the business will create the need for those positions and provide an approximate hiring timeline.
That’s very different from simply listing 10 positions.
Imagine an investor planning to open a restaurant.
The staffing plan includes a general manager, kitchen employees, servers, and other personnel. Operationally, those positions may make perfect sense.
Now we have to pay for them.
Once we calculate salaries and wages, payroll taxes, and other operating costs, we may discover the restaurant needs considerably more revenue than the investor originally anticipated to support that team.
So we go back to the revenue projections.
How many customers can the restaurant realistically serve? What’s the expected average ticket? How many days will it operate? What do food costs look like? How much will rent consume each month?
As we answer those questions, we start seeing whether the staffing plan and the financial plan actually belong to the same restaurant.
This is one of the areas we spend considerable time on when preparing Direct EB-5 business plans at Visa Business Plans. Our plans include five-year staffing, revenue and profit-and-loss projections, along with the assumptions supporting those numbers.
The assumptions matter.
If we’re projecting enough revenue to support 10 or more full-time employees, we need to understand where that revenue is expected to come from. If sales grow significantly in Year 2, something in the business should explain that growth. Perhaps capacity increases, marketing begins producing more customers, another service is introduced or the business expands geographically.
The hiring should follow the same logic.
As the business grows, additional positions should become necessary to operate it. That’s a much stronger financial story than beginning with 10 jobs and manipulating the projections until the company appears able to afford them.
USCIS has emphasized that when the required jobs don’t already exist, the business plan must be detailed enough to allow reasonable conclusions about the company’s job-creation potential. USCIS decisions specifically caution against relying on unsupported assertions or hopeful projections.
And there’s another issue investors sometimes overlook: timing.
A business may eventually generate enough revenue to support its full team, but employees need to be paid while the company is still growing.
That’s where working capital becomes important.
If the business hires aggressively in the early months but revenue takes longer than expected to develop, how long can it comfortably carry payroll? How much of the investment has already gone toward the lease, equipment, buildout, inventory and other startup expenses? What’s left to operate the company while sales increase?
At Visa Business Plans, these are the connections we want to understand before the plan is finalized.
A Direct EB-5 business plan has an immigration purpose, but the numbers still have to behave like the numbers of a real business.
The 10-job requirement is extremely important.
The harder question is whether you’ve designed a business capable of creating those jobs, paying those employees and continuing to grow after they’re hired.
Ten positions on an organizational chart are easy to create.
Building a company that can afford them takes considerably more planning.
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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