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Looking for the Best Location to Begin Operations

Written by Contributor, on 26th Apr 2017. Edited on 3rd May 2017 Posted in General

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For several decades, Silicon Valley was seen by many entrepreneurs as the best place in the world to begin an innovative new business. Today, numerous countries offer tax incentives and have other features that make them very attractive locations for startups and businesses that wish to expand.

The following is a brief overview of some of the top destinations for entrepreneurs that are searching for the best location for their business venture.

Mexico

Mexico offers a host of benefits for businesses that locate in the country, but starting up is not without challenges. In manufacturing particularly, the administrative costs for overseeing and managing production are usually high because of the complex and slow moving legal and regulatory system. 

Maquiladoras in Mexico make it easier for entrepreneurs from outside of the country to startup a new business in Mexico by taking over the burdens of administration and ensuring that operations are in compliance with the country's various regulations and guidelines. 

With this type of arrangement, a company or entrepreneur that is from outside of the country begins operations in Mexico under the shelter of a Mexican corporation. This reduces the company’s liability and exposure to risk while it operates a manufacturing facility in Mexico. The products and services that are produced are then usually, but not always, exported back to the entrepreneur's home country. 

Additional benefits make Mexico an attractive location for businesses, including Mexico's abundance of solar and wind technology, which offers the prospect of green, environmentally friendly manufacturing. The country's $1.3 trillion dollar economy is the second largest economy in Latin America, creating a growing market for products and services. 

Nearly half of Mexico's population is under the age of 20, and is increasingly educated. 3 million of the country's students are enrolled in colleges and universities in Mexico City, which now also churns out an astonishing 130,000 new engineers each year. Despite a highly educated, talented, young workforce, payroll costs are amazingly low for startups in Mexico because of the strength of the American dollar and other currencies.

Additional support in the form of business incubators and co-working spaces make it easier for entrepreneurs to found new businesses. .

Ireland

Ireland is viewed as one of the easiest places in the EU to begin a new business because of all of the public and federal support that entrepreneurs receive. In addition to having a well-educated populace from which to hire workers, there are a host of business incubators throughout the country that provide guidance and resources to new businesses. 

Businesses that start up in the country also benefit from a wide array of tax cuts and incentives, including a low corporate tax rate of 12.5%, flexible R&D tax credits that enable startups to claim back taxes when producing a loss, and a new initiative to help startups first announced in 2015, which allows new businesses to recapture up to 41% of their startup capital via government refund.

The Philippines

The Philippines is increasingly being seen as a tech haven, and many startups center on business process outsourcing and customer support via call center servicing. English is the official language, with a 95% literacy rate. The country produces close to 450,000 new college graduates each year, providing a highly educated pool of workers. 

When it comes to existing infrastructure, there are business incubators to support entrepreneurs with office space and hardware, though these spaces are not as prolific. The country has 50 animation studios, and software development brought in over $1 billion in revenues in 2011 with sales continuing to climb annually. 

Despite a large, talented workforce, pay-scales are relatively low, which allows entrepreneurs to save an estimated 50 to 70% on labor costs.

The country's government offers a host of tax breaks and incentives for businesses. The Investment and Capital Corporation of the Philippines (ICCP) offers funds for startups in the early phase of development, with the goal of helping to create over 500 new startups with a value of $2 billion each by 2020.

Sweden

Changes in tax laws and other regulations are making Sweden an increasingly attractive option for startups. For example, the energy tax on data centers was lowered by 97% at the beginning of the year. Sweden has a growing $493 billion dollar annual economy, and while many taxes remain high, taxes paid as a percentage of profits have declined 8%. 

Various social safety nets lower the risk of starting a company, and the country also boasts a well-educated populace. An abundance of talented workers is one reason why tech companies like Skype, Spotify and Mojang were able to start up and grow rapidly.  

In 2013, the Bureau of Economic Analysis announced the results of a 2011 study, Employment, Capital Expenditures, and Sales Activity of U.S. Multinational Companies which found that USMCs now employed over 34.5 million workers, with much of the growth in employment occurring in overseas locations. 

With increasing regulations and the growing cost of doing business in the U.S., these numbers are likely to continue to grow as countries like Mexico and others have numerous benefits that make it easy for new companies to form and operate. As these numbers grow, so too will the need for maquiladoras and other firms that specialize in easing the way for multinational companies to locate and begin operations across the world.

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