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How Long Does It Take To Start A Business?

23 Feb 2017

4.5 days in the UK, according to the World Bank. Over the last 10 years this has reduced from 10.5 days, making it quicker to start a business. This is one factor the World Bank considers in its Ease of Doing Business ranking, where the UK sits 7th overall.

The number of days to start a business is an interesting indicator as it gives us some idea of corporate competitiveness. As we invest globally it is helpful to see which countries have supportive regulatory environments and which do not. There are some surprising results.

Unbelievably, since 2006 some countries have made it harder to start a business!

  • Ethiopia – it used to take 19 days, now it takes 35 days
  • Kuwait – increased from 35 days to 61 days
  • Venezuela – from a lengthy 143 days in 2006 to protracted 230 days in 2016. No wonder it ranks 187th out of the 190 countries analysed for the ease of doing business.

These countries have a long road ahead to become investment destinations for global capital as they are not yet globally competitive. We give them a wide berth.

Most countries try to reduce the number of days and some have done this quite dramatically.

  • Hungary has reduced the number of days to start a business from 39 to 7. The World Bank report also notes that Hungary has now allowed stores to open on Sundays, something the UK did in 1994.
  • Chile, Estonia, Georgia, Guinea, Guinea-Bissau, Hong Kong, Liberia and Sri Lanka have all reduced the number of days to start a business by more than 80% and it now takes less than 10 days for all of them.
  • New Zealand – has reduced from 12 days to half a day. This is the main reason that New Zealand tops the global ranking for ease of doing business, knocking Singapore (a swift 2.5 days to start a business) into 2nd place.
  • The US, already reasonably competitive in 2006 with 6 days to start a business, has barely improved, and has remained 8th overall in the global ease of doing business ranking.

India has shown steady improvement in its overall global competitiveness over the last year. However, it still takes 26 days to start a business in India and there are many hurdles to overcome. We continue to have some exposure to Indian equities but are mindful of the need for reform.

In the developing world, Vietnam might be one to watch. It is the highest ranked “investable” country in our own analysis of potential economic growth. It has risen to 82nd (out of 190) in the World Bank Ease of Doing Business ranking. It has reduced the number of days to start a business by 48% to 24 days. It has simplified its tax system. However, it is one of the world’s largest exporters so protectionist policies in the US could be damaging. We continue to look for opportunities whilst being mindful of political risk.

Warning – the views expressed by Courtiers in this summary and any video and video transcripts, are reached from our own research. Courtiers cannot accept responsibility for any decisions taken as a result of reading this document, watching the featured video or reading the video transcript and investors are recommended to take independent professional advice before effecting transactions. The price of stocks, shares and funds, and the income from them, may fall as well as rise. Past performance is not necessarily a guide to future returns.

We do not endorse nor accept responsibility for the content of any website not operated by Courtiers which you may visit by following a link from this article.

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