Settling in a new country is usually an exciting thought for many of us. However, the rules of immigration vary from country to country. Therefore, how do you choose the perfect place to move to? And what to do if you want to start a business?
If you are going to start a new business, you should familiarize yourself with the laws of the country regulating entrepreneurial activities. Some countries are much friendlier to starting a business, while others have much stricter rules that can be prohibitive in some cases.
Therefore, as a general rule, the best country to start a business is your own. However, if you want to start a business in another country, you have options.
The Top Economic Indicators That Affect Business Success
By learning to predict the impact of each of these indicators on a country’s economy, you can save a lot of money.
For example, if you invest heavily in France and track the consumer price index, you may notice that inflation in that country is rising. An informed investor usually knows that this may indicate that the central bank is about to raise interest rates.
Knowing that such a price hike could negatively affect your stock, you may decide to protect yourself by reducing your investment in that country’s stock for the time being.
As someone who wants to invest in businesses in other countries, you should consider some of the most important economic indicators to guide you in this endeavor:
Gross Domestic Product (GDP)
GDP is the market value of all final services and goods produced in any country over some time.
A country’s GDP is important because it speaks to the functioning of the economy and its size. If a country’s GDP is rising and inflation is not an issue, business in that country tends to be better.
Consumer Price Index
By measuring changes in the prices of specific consumer services and goods bought by people in a country.
The CPI is often used to indicate inflation, negatively or positively affecting a country’s currency. It, in turn, should determine how much you can invest in that country.
PMI Manufacturing And Services
PMI Manufacturing and Services is simply measuring how healthy a country’s manufacturing sector is in a given period.
Knowing a country’s PMI should help you understand how well or poorly a particular company is doing and why.
Employment Indicators
It is perhaps the most critical indicator to watch. How productive and wealthy a country’s citizens directly determine how much money they can spend on goods and services.
If unemployment rates rise, citizens will have less disposable income and, as a result, consumer spending will fall, which, in turn, will negatively affect GDP and the country’s overall economic growth prospects; this isn’t usually good for business.
Central Bank Minutes
A country’s main or central bank directly determines the financial policies that will shape its economy during the fiscal year.
Listening to what central bank officials have to say, or reading previous issues of central bank minutes, can give you an idea of future policy actions that will directly affect business.
While these are the five most important indicators that show where a country’s economy is headed and if it is good for business, they should not be used as the only information, it should only be a starting point for further examination of specific areas and niches of business.
The Best Countries Where You Can Start A Business
Now you should know what to look for in a country to determine if it’s good or bad for business. Look at some of the most profitable countries you can consider (in no particular order):
United Kingdom
A Quick Glance:
- GDP Growth is 1.8%
- Per-Capita GDP is $39,000
- Public Debt/GDP is 89%
- The population is 66M
- Unemployment is 4.9%
- Trade Balance/GDP is -4.4%
- Inflation is 0.7%
This country topped Forbes’ 2020 list of countries to do business in 2020. It was probably for a good reason!
They say the numbers don’t lie, and currently, the U.K. remains one of the best countries to open a business despite all the uncertainty of Brexit.
However, beyond the excellent economic numbers, other factors put the U.K. at the top of the list. These include:
- Ease of incorporating a company: In U.K. this can be done within an hour and will cost you £14 or about a maximum of £20.
- Tax benefits: The U.K. government offers various tax incentives for founders, investors, and even employees, making the country very attractive financially.
In addition, the U.K. has one of the lowest corporate tax rates among the G20 countries, which can make it very attractive to business investors.
Singapore
A Quick Glance:
- GDP Growth is 2%
- Per-Capita GDP is $56,000
- Public Debt/GDP is 113%
- Population is 5.6M
- Unemployment is 2.1%
- Trade Balance/GDP is 19%
- Inflation is -0.5%
According to the World Bank, Singapore is among the most favorable environments for starting a business.
In addition to the excellent economic indicators mentioned above, the country also has the following opportunities:
- It is politically stable
- The country is one of the richest globally, which means that the population has a large disposable income
- The country has a strong labor force
- The country does not have tax dividends or capital gains
- The country has many free trade agreements that open up huge markets
- You can easily register and start a business online.
Singapore also offers affordable airfares to neighboring countries. As a business owner, you will have access to other absorption markets such as Thailand, Indonesia, the Philippines, and Malaysia.
Norway
A Quick Glance:
- The GDP growth is 1.1%
- Per-Capita GDP is $75,000
- Public Debt/GDP is 36%
- The population is 5.3M
- Unemployment is 4.7%
- Trade Balance/GDP is 5%
- Inflation is 3.6%
In Norway, communication with the government can be reliably maintained over the Internet. You can register a company easily, and you can also ensure that complying with the tax laws in this country is usually an easy process.
Another advantage of starting a business in Norway is that it is a high-tech country. Most Norwegians are willing not only to adapt but also to pay for new technology.
It means that you can easily find a highly skilled workforce, especially in information technology, design, finance, and music technology.
Other factors that make this country one of the best places to do business include:
- The population tends to be wealthy, which means a large disposable income
- Politically very stable
- It has well-developed communication and transportation infrastructure
- It is a major player in the E.U. and has long-standing trade relations with other E.U.countries.
Norway is a very transparent country, where the level of corruption is minimal. For these reasons, Norway is a desirable option for any straightforward business investor who wants to build an honest business.
New Zealand
A Quick Glance:
- GDP Growth is 3.6%
- Per-Capita GDP is $44,000
- Public Debt/GDP is 33%
- Population is 4.8M
- Unemployment is 5.1%
- Trade Balance/GDP is -2.8%
- Inflation is 0.6%
In addition to the above economic indicators, some other advantages make this country attractive for business:
- There is a skilled labor force that is not too expensive
- There are no taxes on wages, capital gains, or social security
- Business registration can take as little as two days.
There is also a wealth of information available online through Statistics New Zealand that should help you do thorough research on any industry you would like to invest in.
It should immediately give you the added benefit of learning about the culture, the population’s spending habits, and how well your niche is doing.
Hong Kong
A Quick Glance:
- GDP Growth is 2%
- Per-Capita GDP is $46,000
- The population is 7.4M
- Trade Balance/GDP is 4.6%
- Unemployment is 2.7%
- Inflation is 2.6%
Hong Kong’s economy has grown quite steadily over the past few decades, a testament to the region’s practical and economically sound business policies.
As a free-market economy, Hong Kong is heavily dependent on global trade and finance. It is known to have a highly educated workforce and a superbly designed and built transport and communications infrastructure.
Hong Kong’s economy is so prosperous that it has even established itself as a stock market for Chinese companies that want to off-shore trade. However, because Hong Kong has limited natural resources, it imports almost everything from food to raw materials.
It may seem a little discouraging to aspiring industry titans, but remember that Hong Kong imposes no tariffs on imported goods except for four: hydrocarbons, spirits, methyl alcohol, and tobacco.
Mexico
A Quick Glance:
- GDP growth is 2.3%
- Per-Capita GDP is $8,500
- Public Debt/GDP is 50%
- The population is 129M
- Unemployment is 3.9%
- Trade Balance/GDP is -2.2%
- Inflation is 2.8%
Due to the high crime rate in many parts of Mexico, not many investors would immediately decide to open a business in this country. However, despite these difficulties, Mexico is still one of the best places to start a business.
It is primarily due to the extensive business registration reforms that have been implemented in the country. These changes have drastically increased the number of business registrations in general.
It is now usually much easier to register and start a business in Mexico. It only takes around eight working days for your business to start operating legally in the country.
Add to that the fact that the country has a ready and willing workforce that is considered affordable compared to other countries on this list, and you get Mexico as a great place to do business in general.
They also have free trade agreements with 46 different countries, thus opening up huge potential markets for investors willing to participate in the great manufacturing-oriented economy.
Switzerland
A Quick Glance:
- GDP growth is 1.4%
- Per-Capita GDP is $80,000
- Public Debt/GDP is 33%
- The population is 8.5M
- Unemployment is 3.3%
- Trade Balance/GDP is 10.5%
- Inflation is -0.4%
With quite a low unemployment rate of 3.3%, a booming economy, and a famously stable political environment, Switzerland is certainly one of the best countries in the world, except for the tropical weather.
It has a highly skilled workforce, ready and willing to work (although perhaps not as available as the other countries on this list).
The country has a highly developed service sector plus manufacturing, which specializes in high-tech and knowledge-intensive industries.
It also has one of the most developed financial sectors globally, making it an ideal place for safe, calculated, and stable investments.
In addition to excellent economic growth and excellence, Switzerland has other factors that make it an attractive place to start a business. These include:
- A rather transparent legal system that is easy to navigate
- Consistent economic and political stability
- Low corporate taxes
- Efficient capital markets
- Exceptional communications and transportation infrastructure
Also, it is a reliable and valuable member of the E.U., which opens to investors some of the most advanced and gigantic markets in Europe.
Canada
A Quick Glance:
- GDP growth is 1.5%
- Per-Capita GDP is $43,000
- Public Debt/GDP is 99%
- The population is 37M
- Unemployment is 7%
- Trade Balance/GDP is -3.3%
- Inflation is 1.4%
Despite the high standard of living in the Great White North, the country has made impressive strides in manufacturing, services, and mining.
These accomplishments have greatly helped transform the country from a predominantly rural economy to a mainly urban and industrialized one.
The country also has a vast oil and gas sector, which ranks third in oil reserves after Venezuela and Saudi Arabia.
Canada has extremely balanced bilateral trade with the United States, which opens up a huge market for business investors who want access to the United States through Canada.
It has a very strong political climate, excellent health care, and a large skilled workforce. All of this makes it a profitable location for business investors looking to take advantage of the service or industrial sectors.
Prospective immigrants can even check their eligibility for immigration to Canada with the Canadian immigration points calculator available online.
Canadian government is trying to make immigration as transparent as possible, still with a help of an immigration consultant, this process can go times more smoothly.
However, be aware of scams. Each consultant should have official registration. Moreover, it could be a good idea to check out reviews before signing into anything. For example, you may read the MDC review to see if this one this company a fit for you. You may do the same and google reviews for any other company.
Ireland
A Quick Glance:
- GDP growth is 5.1%
- Per-Capita GDP is $69,000
- Public Debt/GDP is 73%
- The population is 4.8M
- Unemployment is 7.9%
- Trade Balance/GDP is 3.3%
- Inflation is -0.2%
This rather small, trade-dependent country has a strong economy recently put to the test but proved stronger than it.
After formally withdrawing from the E.U. and the IMF bailout program, Ireland stabilized its economy during the 2007 economic crisis and has experienced rapid economic growth.
Consequently, the government increased government spending and drastically cut some taxes, which is good news for business owners.
Since the collapse of the construction sector, Ireland has become more independent of exports for its economic growth due to the same economic crisis. It makes it one of the best destinations for any business owner looking to establish an export-oriented manufacturing company.
Despite being quite small, the country has a large labor force, and is experiencing an unprecedented period of economic growth (GDP growth exceeded 26% in 2015), and is politically stable.
Germany
A Quick Glance:
- GDP growth is 1.9%
- Per-Capita GDP is $43,000
- Public Debt/GDP is 68%
- The population is 83M
- Unemployment is 4.2%
- Trade Balance/GDP is 8.3%
- Inflation is 0.4%
Known to have one of the biggest economies in the world and the largest in Europe, Germany is a great place to invest and a leading exporter of cars, machinery, appliances, and chemicals.
However, the country’s greatest advantage is its vast, highly skilled, and highly educated labor force. Although this labor is not as affordable as in many of the countries on this list, Germany has many positives.
But despite all this, the country’s economy suffers from low levels of investment, making it a ready and mature market for foreign investors willing to take on the labor costs of available labor.
As a member of the E.U., Germany adheres to strict production and output standards. By opening your business here, not only can you take advantage of the predominantly well-funded E.U. markets, but you can also raise your standards of production.
Standardized across the board, they should give your brand a competitive edge in the global marketplace.
Going international can greatly reduce your dependence on the local market and spread the risks around the world.
Tips For Starting A Business In A Different Country
Although technological advances have made it much easier to find what it takes to start a business in another country, the real problem remains.
Imagine how challenging it can be to start, run, and build a profitable business in your home country. Now multiply that number several times to get a clearer idea of how difficult it could be to start a business in another country.
For starters, you will probably have to comply with an extensive list of local and foreign regulations, as well as deal with things like exchange rates and language barriers.
All of these play an important role and could very well ruin your prospects. Here are some helpful tips you should consider before starting a business in another country:
Research The Business Practices That Involve Your Niche
It would be best if you familiarize yourself with the laws, procedures, regulations, banking trends, and tax laws that apply in the country where you are investing as a business owner.
It would be best if you had local lawyers on the ground, people who should give you more of a clear idea of what is required to register your business, buy suitable real estate, pay labor and make a real profit.
Have A Clear Understanding Of The Country’s Political Climate
One of the biggest problems facing the countries named the worst for doing business is that they all have unstable political climates.
Countries named the best for starting a business show just the opposite picture: they all have very stable political climates.
A country’s political climate largely determines the type of economic growth and the fiscal policies that will be implemented during the fiscal year. It also often indirectly determines the level of corruption and bureaucracy associated with starting a business.
Study Cultural Differences
A bikini manufacturer can have a considerable market share in the most liberal and Western countries. Still, you cannot objectively expect the same business to succeed in a conservative Muslim country.
You should be aware of the cultural differences that define the country in which you invest. What might be a great business in the U.S. might not sell as well in China, and vice versa. You also should be aware of different social customs and language barriers. In some countries, no deal is done until the parties shake hands, have tea, or take a bath.
These are just some of the specific cultural differences you should be aware of when entering the international marketplace.
Get Local Guidance
You should hire attorneys in both your country and your destination country. However, you will also need to get references from businessmen and local labor representatives. These are people who know the details of doing business in your chosen country.
They should teach you things you can’t read about in a report or online. They should show you how to work with the locals to ensure your business runs smoothly. The closest they are to your niche, the better.
The Bottom Line
Starting a business in another country is a great idea for all the right reasons: new markets, more modern technology, a better workforce, and lower rates. However, before you can enjoy all that, you need to find the correct country to start your business.
Hopefully, this guide should give you a good idea of where to start and which countries to avoid.
Despite the favorable conditions for doing business in some other countries, there are many legal hurdles you will have to go through to open a business abroad.
Also, you should keep in mind that if you have citizenship in a country other than where your business is located, you might have to pay taxes to both countries.
Therefore, before you open a business in another country, make sure you are fully aware of everything, including the laws of your home country and the country where your business is located.
