We’ve been getting a lot of inquiries at Visa Franchise about the pending recession in 2024. Are we in a recession US? What’s it like doing business in the United States right now? And depending on the industry, you’re doing really well, or you might be a little afraid.

If I was to open up a small business in the United States right now, I would be especially mindful of the minimum investment required, as the next few months or even the next couple of years might be tough for some specific industries.

Now, in terms of what industries you might want to avoid, think about different businesses that the middle class or upper middle class mainly goes to, to indulge and it’s not really a necessity, or that they can reduce the frequency that they go to use that product or use that service. So, one example that comes to mind is nail salons. The minimum investment amount for such businesses can vary significantly.

So, they were hit super hard during the pandemic, as people were not comfortable getting their nails done in salons, and they will get hit hard as they have been in prior recessions, as people, when they don’t have as much money, they’re gonna forego that $50 or $100 manicure or pedicure, depending on the region where you are, the city where you are, the costs are gonna vary quite a lot.

So, if you’re going for the ultra-high-end, you’re probably fine, but if you’re selling to consumers that make 50k, 100k a year, you’re probably going to be hit hard if you’re looking to operate a nail salon in the next couple of years.

Beauty in general, you’ve got to be careful. Understand what segments of the population you’re going after. And if it’s a necessity, or it’s something that’s a nice to have, and it’s not as important, so they might reduce the frequency, or the customer might take a hiatus of 6 months, 12 months from the service or product you’re offering.

Another thing that might be hit is barber shops, where you could expect to go, you know, every six weeks when times are good, you might push that out to every eight weeks. And if you’re operating a barber shop, that’s a significant reduction in terms of revenue, and that gets amplified by the time it goes to you in terms of profitability.

Similarly, the car wash industry, particularly eco-friendly and mobile car wash solutions, may face challenges as consumers cut back on non-essential services during economic downturns.

So if the revenue dips 25% because your customers aren’t going to the barbershop as much, oftentimes in that scenario, the profit is going to go down even further, 30%, 40%.

So, in the beauty industry, you’ve got to be careful. And when you’re having these calls or franchisors, ask how they did financially in 2008, how they did in 2020, and how they’re currently doing right now as of 2024. Talk to at least five franchisees of the different concepts that you’re looking to investigate for your E-2 Visa business in the United States.

For the E-2 Visa, you could go with buying an existing business, you can start a franchise, you can buy an existing franchise, or you can set up your own business. There are plenty of opportunities in the United States. There are many successful business owners in the United States that are doing very well and have the best month they’ve ever had in the history of their business.

But that doesn’t mean that you shouldn’t do your research and you shouldn’t learn from the past and what happened in the prior recessions, in particular, if it’s a franchise business, it’s nice because you have the historics going back a few economic cycles.

I hope you found this video informative. If there’s other ideas for information you’d like us to share on small businesses, the E-2 Visa, other investor visas, let us know.

Understanding E2 Visa Requirements and Substantial Investment

The E2 visa is a non-immigrant visa that allows foreign investors to enter and work in the United States by investing in a US business. To qualify for an E2 visa, the business must meet specific requirements, including being a for-profit enterprise, being at least 50% owned by the foreign investor, and being a non-marginal business.

This means the business should generate more than just enough income to provide a living for the investor and their family; it should contribute to the US economy, such as by hiring employees. Additionally, the business may need to employ an essential knowledge employee, someone with specialized knowledge critical to the company’s operations, to demonstrate that no other employee in the U.S. can be trained to perform the same role within the specified visa timeframe.

One of the key requirements for an E2 visa is making a “substantial investment” in the business. While US immigration laws do not specify an exact dollar amount, the investment should be significant enough to demonstrate a firm commitment to the business and ensure its successful operation. At Visa Franchise, we recommend an investment of at least $100,000. This amount typically covers the initial purchase, equipment, inventory, staffing, and marketing expenses, providing a solid foundation for your business venture.

What is a Substantial Investment?

A substantial investment is a cornerstone requirement for securing an E-2 visa, allowing foreign nationals to enter and work in the U.S. by investing in and operating a business. While U.S. immigration laws do not specify an exact dollar amount for what constitutes a substantial investment, it should be significant enough to demonstrate a firm commitment to the business and ensure its successful operation. At Visa Franchise, we recommend an investment of at least $100,000.

This amount typically covers the initial purchase, equipment, inventory, staffing, and marketing expenses, providing a solid foundation for your business venture. Making a substantial investment not only shows your dedication but also increases the likelihood of your business thriving in the competitive U.S. market.

Choosing the Right Proven Business Model

Selecting the right business model and having a solid business plan is crucial for E2 visa success. Franchise businesses are a popular choice among E2 visa applicants due to their proven business model, brand recognition, and extensive support from the franchisor. Franchises offer a tried-and-tested business model with an established track record, reducing the unpredictability and risk associated with new startups. Franchise owners benefit from comprehensive training and ongoing assistance, making it an attractive option for foreign investors.

For the E-2 Visa, you could go with buying an existing business, you can start a franchise, you can buy an existing franchise, or you can set up your own businesses.

Consulting businesses are another excellent option for E2 visa applicants. Leveraging your professional experience to start a consulting business can result in low overhead costs and high flexibility. Consulting businesses can encompass a broad range of skill sets, from IT and software development to architecture and design. This diversity allows you to tailor your business to your expertise and the market demand, increasing your chances of success.

Existing Business vs. New Venture

When considering an E-2 visa business, foreign investors often find themselves at a crossroads: should they purchase an existing business or start a new venture? Each option has its own set of advantages and challenges. Buying an existing business can be a smoother path, as it comes with a financial history, an established customer base, and a proven business model.

These factors can make the E-2 visa application process more straightforward and less risky. On the other hand, starting a new venture allows you to build a business from the ground up, tailoring it to your vision and goals. While this can be more challenging and requires a higher level of commitment and resources, it can also be incredibly rewarding. Ultimately, the decision depends on your experience, resources, and long-term objectives.

Consulting Business Models to Avoid

While many business models can be suitable for an E2 visa, some are best avoided. Businesses that are highly competitive or have low profit margins and high operating costs may not be the best choice for an E2 visa applicant. For instance, industries with intense competition can make it challenging to secure a stable customer base and achieve profitability.

Additionally, businesses requiring a high level of technical expertise or specialized knowledge may not be suitable if you do not possess the necessary experience. It’s essential to evaluate the business model’s viability and your ability to manage and grow the business effectively.

Businesses with Low Demand

Certain businesses may struggle to meet the E-2 visa requirements due to low demand. These businesses often face challenges such as seasonality, a limited customer base, or being part of a declining industry. For instance, seasonal businesses like summer camps or winter resorts may only generate income during specific times of the year, making it difficult to sustain operations year-round.

Similarly, businesses with a limited customer base, such as a small-town convenience store, may struggle to generate sufficient revenue. Additionally, businesses in declining industries, like video rental stores, face an uphill battle as consumer preferences shift. It’s crucial to consider these factors when selecting a business for your E-2 visa application to ensure long-term viability and success.

Businesses with High Competition

Entering a highly competitive market can pose significant challenges for E-2 visa applicants. Businesses in these markets often face intense competition from established players, a low barrier to entry, and high market saturation. For example, fast food restaurants in a crowded market may struggle to differentiate themselves and attract a loyal customer base.

Retail stores in highly competitive shopping districts face similar challenges, as they compete with numerous other retailers for the same customers. Service-based businesses, such as consulting or accounting firms, can also be difficult to establish in a crowded market where many providers offer similar services. When considering an E-2 visa business, it’s essential to evaluate the level of competition and your ability to carve out a niche in the market.

Sectors to Avoid in 2024

When considering an E2 visa business, choosing a sector with growth potential and high demand for products or services is essential. Some sectors to avoid in 2024 include those that are highly competitive, have low profit margins, or are declining in demand. For example, the chicken sandwich market is highly competitive, making it challenging for new franchisees to secure profitable locations and establish a solid customer base.

Similarly, the chicken wing industry faces intense competition, making it difficult for new franchisees to stand out in a crowded market. Identifying and avoiding these sectors can help you focus on more promising opportunities. Residential cleaning services, driven by an increase in dual-income households and a shift towards more hygienic lifestyles, present a growing demand and financial viability.

Alternative Business Ideas

Home and Car Services

Home and car services are consistently in demand, making them an excellent option for E-2 visa business investors. These services can include home cleaning and maintenance, lawn care and landscaping, car detailing and repair, and home repair and renovation. One of the significant advantages of these businesses is that they can be operated with a relatively low initial investment, making them accessible to a wide range of investors.

Additionally, home and car services can provide a steady stream of income and can be scaled up or down depending on your goals and resources. By focusing on essential services that people need regardless of economic conditions, you can create a resilient business that stands the test of time.

Conclusion

In conclusion, the E2 visa offers a unique opportunity for foreign investors to live and work in the United States by investing in a US business. To qualify for an E2 visa, the business must meet specific requirements, including being a for-profit enterprise, being at least 50% owned by the foreign investor, and being a non-marginal business.

Choosing the right business model is crucial for E2 visa success. Franchise businesses and consulting businesses are popular choices due to their proven business model and low overhead costs. However, it’s essential to avoid business models that are highly competitive or have low profit margins and to choose a sector that is growing and has a high demand for products or services. Conduct thorough research, seek professional advice, and make informed decisions to increase your chances of success with your E2 visa business venture.