When starting a new venture, you are easily overwhelmed with the amount of tasks and challenges you have to face. Can you imagine the pressure of starting a business in a new country and in a new market?
Before anything else, it is important to have enough knowledge and understanding of your business finances. You should have enough funds to establish your business in the new market. If you are falling short on capital, we suggest you secure funds from an alternative finance firm beforehand.
However, the location you decide upon to start your venture has a major impact on the success and profit of your company. It has come to our attention that the easiest countries to start a business in 2018 are certainly not the largest economies.
As we all know, China is the world’s second largest economy. But when it comes to ease of doing business, China’s rank is 78th. This ranking was examined among 190 countries across the globe and based on 10 key factors:
- Starting a venture
- Dealing with construction permits
- Getting electricity
- Registration of estate
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across national borders
- Enforcing contracts and agreements
- Resolving insolvency
So if you are still looking for a prime location that offer ease of running a business, this article might as well come handy. We have listed down five top countries along with the reasons why it is easiest to run a business there.
Note: The Distance to Frontier (DTF) scores shows us how far an economy is currently from the best performance achieved by any other competing economy. The score ranges from 0 – 100, with 100 being the highest performance (frontier).
1: New Zealand
DTF Score 2018: 86.55
DTF Score 2017: 86.73
Change in DTF: -0.18
For two years in a row, New Zealand has been the economy known for running a business at ease. The country has earned top scores for starting a new venture, registration of estate and getting credit.
However, ‘starting a business’ factor has a number of steps of its own that entrepreneurs are expected to go through, especially if they are starting anew and planning to formally operate it along with the time and cost it consumes to complete those steps.
New Zealand also ranks well for protecting minority investors along with the construction permits. Because of their fine online process, starting a business takes only few hours.
DTF score 2018: 84.57
DTF score 2017: 84.53
Change in DTF: -0.04
For the years 2015 and 2016, Singapore was the top most economy known for running a business at ease. Also, it has been consistently on the second place for next two years. Overall, the country ranks second when it comes to enforcing contracts and agreements. It ranks fourth for protecting minority investors. Singapore has also been ranked well in factors such as starting a business and paying taxes.
DTF score 2018: 84.06
DTF score 2017: 84.07
Change in DTF: -0.01
Denmark happens to be the third easiest economy for starting a business venture. It has been ranked higher in factors such as trading across national borders. It has also achieved high marks in dealing with construction permits, registration of estate and resolving insolvency. Denmark has made it easier to start a venture by implementing an online platform allowing entrepreneurs to complete business and tax registrations simultaneously.
4: South Korea
DTF score 2018: 83.92
DTF score 2017: 83.92
Change in DTF: No Change
South Korea has been consistent on the fourth spot and has been ranked first in enforcing contracts and agreements and second in getting electricity. The economy’s other strong factors included: resolving insolvency and starting a business. In the recent years, South Korea has also made advancements to make property transfer easier and has strengthened minority protections. However, the only downfall was its 2016’s reforms which made paying taxes complex and costly for the foreign companies.
5: Hong Kong
DTF score 2018: 83.44
DTF score 2017: 83.15
Change in DTF: +0.29
Hong Kong as you can see has surely made some progress to earn the fifth spot. It ranks third for starting business and paying taxes. It has been ranked high for getting electricity and dealing with the construction permits. As the reforms over the past few years eliminated the requirement for company seal, it has become easier to start a venture here.
Moreover, with improved access to credit, taxpaying is easy and less costly for foreign companies and it is also easy to get electricity by streamlining the process for reviewing connection applications and installing meters.