How much does it cost to start a business? There’s a world map for that
- As the old adage goes, you must spend money to make money.
- Just about anywhere, setting up shop requires a significant bit of cash.
- But as this world map shows, the cost varies greatly by country.
Starting your own business should be cheap, right? Because if you’re successful, you create jobs, wealth, and tax revenue. Everybody wins. And yet, becoming an entrepreneur is not cheap — at least not everywhere.
As a budding businessperson anywhere, you must jump through a series of administrative hoops by acquiring the proper approvals, permits, and licenses. Those cost money as well as time.
So, how much cash do you have to fork out before you can start forking it in? Based on World Bank data, BusinessFinancing.co.uk produced a map for that. And it shows some pretty stark differences between countries. But first, some context:
- For the benefit of comparison, the map has converted all local currencies into U.S. dollars. By that metric, the United Arab Emirates is the most expensive country in the world to start a business: $7,443.51. The cheapest countries are Rwanda, with no cost for the first two years; and Slovenia, where there are no fees, only a requirement to have capital of €7,500 ($8,900).
- However, these absolute amounts should not just be compared to each other. They should also be considered against the local living standard, which determines relative affordability. For example, setting up shop in Kazakhstan costs $12, which is just 2 percent of the average monthly wage. Doing the same in Congo costs $1,232, which is more than two times the Congolese annual income.
Europe: UK beats Belarus
Europe is a pretty diverse place when it comes to the cost of setting up a business. On the low end of the scale, twelve countries have fees of less than $100. On the high end, eleven countries require more than $1,000.
- Apart from Slovenia (see above), the UK is the cheapest country in Europe, even beating Belarus ($18.18). All you need to pay is a £12 ($17) fee to register at Companies House, and you’re good to go.
- The most expensive place? Italy, where setting up an azienda will set you back a whopping $4,895. That’s more than twice the average monthly income ($2,403).
North America: U.S. in the Goldilocks zone
The U.S. ($725) is in North America’s Goldilocks zone: only half as expensive as Mexico ($1,463.81) but more than four times as dear as Canada ($166.19).
- Still, the U.S. cost of setting up a business is just 16 percent of the average monthly paycheck ($4,458). That compares favorably to the affordability of becoming a company owner in Mexico, where it equals nearly two and a half average monthly paychecks.
- The absolute cheapest place in North America is Belize ($99.31), which is about 33 percent of the average monthly wage in the country.
- In absolute terms, the Bahamas are the most expensive country ($1,810.92), but in relative terms, it’s Haiti: setting up a company costs $932.80, which is close to 14 Haitian monthly paychecks ($67).
South America: Venezuela, land of opportunity?
Setting up a business is very expensive in Suriname, Ecuador, Bolivia, and Uruguay but relatively affordable elsewhere. It’s even super cheap in Venezuela and Chile.
- Suriname is the most expensive country in South America, both in absolute and relative terms: it costs $3,030 to set up, which is more than 11 times the monthly income. And that’s before an extra 8 percent on top for a notary service.
- What a difference one country over: in Venezuela, all you need is 21¢. That pays for the reservation of your company name, its publication in a local newspaper, and other formalities. That is less than 1 percent of Venezuela’s relatively low monthly income ($1,232). Then again, as Venezuela inches closer to economic collapse, it makes sense for its government to remove as many barriers to entrepreneurship as possible.
Africa: improving, but a long way to go
Africa’s low wages are a double-edged sword. They are a boon to companies in search of manual labor but a barrier to local entrepreneurs looking to invest in a company of their own. In many places, those barriers remain firmly in place, but others have realized the benefit of encouraging start-ups.
- The most expensive African country in absolute terms is tiny Equatorial Guinea ($2,322), where entry into business eats up 7.2 average monthly paychecks.
- In relative terms, it is nearby Congo (not DR Congo, but its smaller neighbor), which has the highest relative cost of starting a business, not just in Africa but the world: 25.5 average monthly paychecks.
- However, across the Congo River, in the DRC, the cost of starting a business is just $80. It’s one of more than a dozen African countries where you can set up shop for less than $100. And that includes economic powerhouses like Egypt and South Africa.
Middle East & Central Asia: very expensive to very cheap
This is not one region, but two: the very expensive countries are in the Middle East, and the very cheap ones are in Central Asia.
- As mentioned, the UAE is the world’s most expensive place to start a business but not the least affordable: all you need is 2.25 monthly paychecks.
- Neighboring Qatar ($3,951.94) and Saudi Arabia ($1,266.57) aren’t cheap either. However, Bahrain ($230.78) is curiously cheap, less than a third of the cost of starting up a company in war-torn Yemen ($807.79).
- Kyrgyzstan ($8.35) is the cheapest country in its part of the world, but most of the surrounding countries are pretty cheap as well. Perhaps low start-up fees are not the decisive factor for Afghanistan’s business climate right now; its looming civil war is.
East Asia & Oceania: New Zealand is both easy and cheap
With not a single four-figure fee in sight, and relative cost low as well, setting up business in this part of the world is both cheap and affordable.
- Cambodia stands out, but not in a good way. The cost of going into business ($746) in the country is equal to about 7.5 monthly paychecks, the highest figure in the region.
- The cheapest country is Timor Leste ($10), but that still sets you back 9 percent of your monthly income.
- When the chips are down, New Zealand has the best cards. Starting a business in NZ costs $43.48 — low in absolute terms and even lower in relative terms: just 2 percent of the average monthly paycheck ($2,838). On top of that, the World Bank rates New Zealand first in terms of ease of starting a business: just one procedure, and you’re up and running in less than a day.
Maps by BusinessFinancing.co.uk, reproduced with kind permission. Find their article on this topic here.
Strange Maps #1093
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