Exporting to the United States – A Team Canada Inc Publication

3.4 Direct selling

Direct selling is a simple concept – you sell directly to your American end users. This end user might be another company, a level of government or an individual.

There are several modes of direct selling:

Establish a U.S. presence

You can do this either by opening a U.S. branch of your company or by establishing a separate U.S. subsidiary, such as a corporation. While it adds a layer of complexity to your operations, having a U.S. presence can be advantageous – for example, it could allow you to operate a retail outlet in the heart of your U.S. market. In addition, some types of U.S. business entity can protect your company's Canadian assets by restricting your U.S. legal liabilities to your American operations. Your business will also be seen as more "American," and that may attract buyers who might avoid a perceived foreign product or service.

If you do decide to set up a business presence in the United States, you should obtain the services of an American lawyer or a lawyer well acquainted with U.S. law. He or she can recommend the best type of entity to establish and the state whose business laws are most favourable to your type of company. Your lawyer will also manage the setup process, which includes:

• establishing the business, which might be a branch of your Canadian company, a U.S. limited-liability company, a U.S. corporation or some other kind of business entity;
• obtaining Certificates of Authority for each state in which you'll do business;
• registering with local, state and federal tax authorities; and
• obtaining any professional licenses necessary.

You can familiarize yourself further with the basics of American business law at Business.gov.

Sell by catalogue

This involves producing and distributing a catalogue, and obtaining a well-targeted mailing list. You'll also require a mechanism to take orders and payment, and a way to deal with returns and warranties. (We'll examine payment methods, returns and warranty issues in more detail below, in section 3.5.)

Sell by direct mail

With this approach, you send brochures and other promotional material to many potential customers. As with catalogue sales, you'll need a targeted mailing list, an order-taking procedure and a returns procedure.

Sell through e-business

The Internet may provide a very fruitful sales channel for your company. Even when doing business online, though, you'll still have to deal with matters like shipping and customs regulations. Furthermore, you'll need to convince potential customers that any electronic transactions they make with you are secure, and that their privacy and personal information will be protected.

Take orders at American trade shows

Unless you have a U.S. work visa, you can't actually take money for your goods at a trade show. However, you can take orders for later shipping from Canada.