You have to spend money to make money – so goes the conventional wisdom. But this is not just good advice for the entrepreneur looking to expand their business. It’s a legal and practical necessity to establish your business in the first place.
New business owners must shell out for approvals, licenses, permits, and inscriptions. Governments often require a business to have a paid-in minimum capital requirement – a set amount of cash in the bank. These processes are not just expensive but time-consuming and complicated. For example, before legislation to simplify start-up procedures and stimulate greater levels of entrepreneurship, Saudi businesses had to pass through 13 procedures and have 1,057% of income per capita in the bank before opening up shop.
The World Bank’s Doing Business project keeps figures on the cost and procedures you need to start a small- to medium-size limited liability company in every country.
BusinessFinancing.co.uk converted the figures to US dollars and compared them to the local average income so they could map the cost and affordability of starting a business around the world. They found:
The United Arab Emirates is the most expensive country to establish a business, with start-up costs of $7,443.51.
There are no fees to start a business in Rwanda for the first two years, and in Slovenia the only ‘cost’ is a capital requirement of €7,500 with no fees.
Starting a new business is least affordable in Congo, where $1,232 in fees equates to 2,554% of the average monthly income.
In Kazakhstan it takes just 2% of the average monthly income ($12 against $531) to start a business.
The cost of starting a business in Asia and particular the Philippines
Our region is relatively cheap and affordable for starting a business, with no four-figure fees and no four-figure affordabilities. In fact, the only country with seriously prohibitive figures is Cambodia, where you’d need seven and a half unspent paychecks to cover the $746 fees.