Our final stop off in North America, as we continue the search for the world's best start-up hub, takes us to New York. So, does its start-up credentials live up to all the hype?
- Population: 8.5 million
- Pros: It's New York! One of the world’s truly global cities, the action and money are not hard to find, plenty of talent to choose from too.
- Cons: See below, the benefits and prestige of being based in NY come at a cost. There’s also countless administration hurdles to overcome when registering your company.
- Cost: Very high. For those entrepreneurs wishing to bootstrap, this may not be the best option, with rent prices only London can rival.
- What to expect: A whirlwind of meetings, contacts, networking and drinks. Strap yourself in and prepare to hustle.
To help us answer this question we sat down with James Wilkinson, COO of Streaming Tank, a live video streaming logistic agency. Having recently opened his company’s New York office he was able to shed some light on the nuances of doing business in Manhattan and offer up tips for anyone thinking of relocating their start-up.
What are best aspects of doing business in New York?
New York is very much where the action is and thus, the money. Even if the brand that you are dealing with has offices throughout the United States, the final calls tend to be done in Gotham.
Everything is focused on a tiny area (Manhattan is only 13.4 miles by 2.3 miles), which means a company can focus very quickly. New York is very friendly and people move in groups, this is why networking is so important in the city and there is something happening seven days a week. People in New York are open and hungry to new ideas and concepts and once you open the doors their money will follow.
What are the downsides to doing business in New York?
Administration is their biggest downside. There is paperwork for everything and fines if you don’t get it right. For any new company starting-up in New York (or indeed the United States), it is a huge shock on how far behind the US is in so many areas compared to Europe.
Banking is still by cheque in most cases and they have not heard of chip and pin yet. Most services take a huge amount of time to set up as the structures are not as efficient as Europe. It is a very expensive place to do business and you must expect to at least double your expected set-up costs.
How would you describe the business culture in New York?
New York always works in the fast lane and it never stops. You will find that people expect you to be turned on to business 24/7. It is very competitive, but that is one of the greatest aspects of New York and why it is so successful.
What are the costs of doing business in New York?
If you are a new company setting up shop in New York there are several areas that need to be looked at first as far as the company is concerned. Most companies register in either Delaware and have a licence to trade in New York (mainly for legal reasons) or they register in New York itself.
It should be noted that companies can have their overseas branch in the US but that leaves them open legally and often US companies only like to trade with US registered companies. Company set-up should be done through an attorney with experience in this field.
Accountants should be found that have experience with working not only with the US but also with cross US and Europe. Regular declarations need to be made to the IRS and New York has a very different tax structure than European countries. However companies with entities in both Europe and the US can benefit from inter-company transactions to benefit from the lower corporate tax levels in Europe.
Company owners cannot benefit from paying themselves on dividends as all companies owners living in the US are counted as staff members so have to pay tax as such.
What tips would you give to an entrepreneur thinking of starting-up in New York?
Hustle, hustle and more hustling!
Normal etiquette for pitching to potential clients is a totally different ball game in New York. New Yorkers expect to be contacted regularly and don’t be offended if you have had a great meeting and they don’t respond back. If they are interested they will tell you but you will often have to contact them multiple times until you get an answer. Take advantage of the networking scene, work through the day and network at night.
If you want to achieve rapid and international scaling of a cutting edge digital business like ours, then a hub office in New York is an absolute must.