Where entrepreneurs decide to launch new business ventures can be as important as other factors in determining the success or failure of their enterprises. Cities, states and countries have different business climates, tax rates and legal, regulatory requirements and other variables that should be taken into account. Ignoring these fundamental issues could lead to a crisis for any new business.
A new international survey by UK-based Small Business Prices provides some “big picture” guidance on this fundamental issue, but should not be considered the last word on the subject. Their list of best countries for start-up businesses is not related to and should not be confused with any lists from Forbes or other news organizations or websites.
The list from Small Business Prices is based on several metrics including the number of new businesses in 43 countries, the type of industries they are in, business survival rates and gross domestic spending on research and development.
The top 10 countries that Small Business Prices concluded are best for start-ups are:
- United States
- United Kingdom
There are other lists and resources to consider when deciding where to launch a new business. They include:
Forbes’ Best Countries For Business (2018)
Forbes rated 153 nations on 15 different factors: property rights, innovation, taxes, technology, corruption, infrastructure, market size, political risk, quality of life, workforce, freedom (personal, trade and monetary), red tape and investor protection. Each category was equally weighted. They only included countries with data across at least 11 categories.
The U.K. ranked among the top 25 countries in each of the categories except political risk where it ranked a couple of spots lower. The U.S. came in at number 17.
It observed that “For all the talk about the potential of emerging markets, developed economies in North America, Western Europe and Asia remain the best places to do business, according to The Economist Intelligence Unit’s latest Business Environment Rankings (BER).
“Singapore looks set to remain the world’s most investor-friendly location in 2014-18, retaining its number-one spot from the 2009-13 period. Switzerland and Hong Kong also defend their second and third place position. The remainder of the top ten is dominated by North America, Scandinavia and other developed Asian economies.”
Their list was based on the results of a global perceptions survey. It ranked countries based on scores from almost 5,000 business decision-makers in a compilation of five country attributes: affordable, bureaucratic, cheap manufacturing costs, connected to the rest of the world and easy access to capital.
The Index provides an overview of the complexity of establishing and operating businesses around the world. Their report analyses the key trends affecting three business areas —accounting and tax, global entity management and HR and payroll. According to the website, entrepreneurs can find out:
- Which jurisdictions rank as the most complex—or simple—based on their business environments.
- Where and how businesses are being pushed toward responsible governance and increased transparency.
- How digitalization has advanced to remove traditional processes during the Covid-19 pandemic.
- Why the drive toward international alignment can clash with local complexities.
Use caution when seeking out and relying on data and research from different sources.
A case in point is the World Bank’s Doing Business report which graded countries’ taxes, investor protection and red tape/bureaucracy.
In 2020, the World Bank said that, “After data irregularities on Doing Business 2018 and 2020 were reported internally in June 2020, World Bank management paused the next Doing Business report and initiated a series of reviews and audits of the report and its methodology. Read the full statement released by the World Bank Group on the Doing Business report.”
Other priorities that should be considered when launching a new business are your expertise, knowledge, financial and other resources, customer base, growth potential, distribution channels and the nature of the products or services you will sell.
Based on other research it conducted, Small Business Prices concluded that, “if you are wanting to start a business that will flourish, and continue to succeed in years to come, then embarking into the drug (biotechnological) industry is the best route to go.”
Of course, not everyone could or should go into that or any business based on rosy predictions or assumptions about an industry—especially those in which they have little or no background or expertise.
And businesses, industries or countries that are hot or trending one year may be out of fashion or challenging the next because of news, developments or current events. Consider the impact of Brexit on the UK, for example.
No matter when or where you decide to start a company, don’t forget the importance of following sound business and financial advice and practices such as those discussed on the website of the U.S. Small Business Administration.