Doing business in USA vs. Canada

Between the USA and Canada there are many similarities in culture, people and lifestyle. There may not be two countries that are more similar to each other in the developed world than these two. However, there are some differences between the two nations and those differences dictate how businesses should alter their strategies when dealing in the other country.

American companies looking to expand in to Canada need to understand a few things about Canada and Canadians. For one thing, Canada is about 1/10 the size of the U.S. but is geographically larger than its friendly neighbour to the south. That means that doing business there can be a little more expensive for some industries and it also means that the potential is much small than in the U.S. However, expanding in to Canada will be less costly to do than any other country because very little has to be changed about the product or service when doing so. In most cases it should be the first expansion step outside the U.S.

For Canadian businesses, the U.S. holds potential to completely sustain a company. However to achieve this, the company would have to open offices in the States. Canadian businesses will usually find that not only is the number of potential customers larger than they’re used to, the willingness of Americans to buy new products and services and give them a try is more than the reluctant Canadian consumer. This makes the U.S. even more attractive for Canadian companies.

Canadian consumers are more conservative and more reluctant to try something new. They will not part with their money as easily as their American counterpart which can make it more expensive to achieve market penetration. However, some of the marketing costs are offset by American businesses before they even think of expanding in to Canada. Canadians have almost the same TV channels and watch similar shows as Americans. This means that to some extent, Canadians are exposed to American advertisements. Canadians regularly see ads for companies that do not operate in Canada and are generally well aware of many American businesses that are only seen in the U.S. This is good news for businesses that plan to eventually expand to Canada.

Canadian companies expanding in to the U.S. will likely notice more competitors than they saw in Canada so they can’t just operate as if they landed in business heaven. They have to formulate the right strategy to differentiate them from the competition in order to carve out a niche. Another very important factor to consider right now when entering the U.S. market is that the U.S. economy is in worse shape than Canada’s. Americans are less eager to spend than usual because of this so Canadian firms need to be patient for the next little while.

Overall, expansion between the two countries can very fruitful if done correctly and with the right frame of mind. Once established in the U.S. and Canada, companies will be on firm ground to enter new markets in Europe and elsewhere. They will have already gained some experience in entering a new market but will likely have not had to pay through their nose to do it.