Whether a company succeeds or fails is often down to a lot more than just the quality, innovation or ingenuity of the business idea that’s put forward. Location is a key factor that is often overlooked despite the fact that it can make all the difference – especially in the current difficult economic climate where every young company could do with a head start. So, in order to give themselves the best shot at succeeding, the most savvy of entrepreneurs will take into account the taxation, investment, and business policies of the nation in which they’re planning to establish themselves, before setting up shop.
This list ranks the top 10 best countries for business from lowest to highest, and is based on the Forbes ranking of the Best Countries for Business. Forbes has ranked each nation’s business-friendliness according to eleven factors: property rights, innovation, investor protection, personal freedom, trade and monetary freedom, red tape, taxes, technology, corruption and stock market performance.
Guinea, Myanmar, Chad, Angola and Zimbabwe are at the other end of the scale, deemed to be the worst places for business. Surprisingly, the United States ranks poorly, in 51st place because its statutory corporate tax rates are the highest in the world amongst developed countries.
There’s no magic formula when it come to business prosperity, but startups will likely want to take some of the places on this list into consideration if they want to hit the international market swiftly and problem-free – and with maximum profitability. So let’s get down to business.
Starting up a business in the Netherlands on average takes just four procedures – and four days – to complete. Monetary stability is well maintained in the Netherlands and the market is very open to global commerce, making it an ideal place for business owners to invest. The country benefits from a high degree of regulatory efficiency which makes entrepreneurial activity easy to manage. Indeed, the entrepreneurial framework is transparent and efficient. Another aspect that may be appealing to potential businesses is the low non-salary cost of labour – particularly in comparison with other countries in the same part of the world.
Canada’s transparent and stable business climate makes it one of the world’s most attractive countries for investment. The Canadian economy has recovered from the global recession relatively rapidly and its openness to global trade and commerce is institutionalised. Business investments do not require a minimum capital investment, and setting one up takes just one procedure and under a week. Licensing requirements are easily met and the cost of labour is moderate.
Up one spot from the previous year’s ranking, Norway is currently classified as the 8th best country for business. The country’s economic competitiveness stems from its flexibility and openness. Norway is a world leader when it comes to economic freedoms such as trade freedom, property rights, and freedom from corruption. This stable, reliable regulatory environment strongly encourages entrepreneurial activity and innovation in the country. Setting up a business in Norway requires minimum capital requirements – but as long as these requirements are fulfilled a business can be established in just five procedures.
In Singapore, launching a business is relatively easy. It takes just three days and three procedures, and requires no minimum capital. Singapore does not tolerate corruption – a reassuring guarantee for businesses that the law will be upheld and respected in the midst of a dynamic economy. Singapore is very open to global investment, and strongly encourages businesses from abroad to set themselves up in the country. This has facilitated the emergence of a competitive financial sector and continues to ensure a healthy economic growth and development.There is no statutory minimum wage, but wage adjustments are advised according to the National Wage Council. Despite a challenging external environment, inflation is under control.
Finland is ranked among the best countries in the world for economic freedom, particularly when it comes to business freedom and freedom from corruption. This creates a sound regulatory environment – strongly encouraging entrepreneurial investment and activity. While commercial operations are handled quickly and with transparency, corruption is perceived as almost nonexistent making it an ideal location for business investment. Establishing a business costs about 1 percent of the level of average annual income and takes just three procedures. Although the non-salary cost of employing a worker is high, severance payments are relatively cheap.
It takes just 3 procedures and 16 days to set up a business in Sweden. Although licensing requirements can be expensive and time-consuming, Sweden is still one of the most business-friendly nations in the world – ranking first overall when it comes to business-friendly technology, and third for innovation. A highly educated Swedish workforce and a GDP per capita amongst the highest in the world also boost its ranking in our list. Moreover, Sweden recently achieved its highest economic freedom score ever according to the 2014 Index of Economic Freedom.
Denmark scores particularly well on this list thanks to its low tax burden and corruption risk. Denmark’s highly educated workforce, and its GDP per capita which is among the highest in the world, are additional incentives for business investment in the country. Denmark is very open to global trade and investment which makes its economy one of the world’s most competitive and flexible. Starting up a business only requires four procedures in Denmark and minimum capital requirements have recently been reduced. Moreover, the labour market is efficient thanks to relatively flexible hiring and dismissal regulations, and monetary stability is well established.
3. Hong Kong
Once again Hong Kong ranks as the third best country in the world for business. Although economic growth slowed for the international trade and finance center in 2013, GDP still grew by 1.4% to $263 billion. According to Forbes, Hong Kong ranks particularly well when it comes to investor protection, trade freedom, tax burden and red tape. Hong Kong has an open attitude towards international commerce – the average tariff rate is of 0% and there are very few barriers to foreign investment. As well as this, Hong Kong’s competitive regulatory regime supports business formation and innovation. Setting up a business is a straightforward process and no minimum capital is required. The government even partially subsidises small and medium-sized businesses.
2. New Zealand
Top of the list in the previous year, New Zealand still ranks very high in the list of best places to do business today. Although the country’s economy of $170 billion is the smallest of the top 10 nations on our list, it is also one of the fastest growing economies (the GDP rose by 2.5% last year). New Zealand received the best scores in four of the eleven categories used to measure the business friendliness of a country. What stands out the most is the personal freedom and investor protection that the country offers, as well as its lack of red tape and corruption. Very few restrictions can be placed on someone trying to establish and operate a business in New Zealand – to the extent that the process of starting one can take just three days.
Up from 6th place the previous year, Ireland steals top spot in the rankings for Best Country for Business today. Despite the major recession that Ireland has been undergoing since 2008 – and the $113 billion bailout package the country needed from other European governments as well as the International Monetary Fund to get back on its feet – Ireland ranks as the best country for business thanks to its low tax burden, its investor protection and the personal freedom that it promises. On top of that, the country’s educated workforce and 12.5% corporate tax rate are hugely appealing to businesses, as well as the language factor which comes as a major plus for companies hailing from anglophone countries. Google, Twitter, Facebook and LinkedIn have all chosen Dublin as an ideal location for their European headquarters.