Want a Speedy Start-up? Try New Zealand or Rwanda
BY Nicole Carter
How can the U.S. ease the process of starting a business? Take a note from countries like New Zealand that are using a "one-stop shop" approach encourage entrepreneurship.
"The U.S. is still incredibly efficient for starting a business, but there’s always room for improvement," says Syliva Solf.
One-stop shop: Get everything you need in one place. It's a simple concept embraced by supermarkets and drugstores. It's also a concept employed by countries around the world that want to attract entrepreneurs and ease the process of starting a business, according to new research.
In a dozens of far-flung countries, from New Zealand to Rwanda, the goal of the one-stop shop strategy is to put all the agencies that an entrepreneur needs to start a business—such as tax offices or employee and property registration bureaus—in one place. In some cases that's a physical space (a shared office with electronic kiosks, for example) or a digital one, say, an online portal site.
"The fewer interactions an entrepreneur has to have with agencies, the less running from office to office they have to do, the easier and faster it is to get their business off the ground," says Sylvia Solf, lead author for the World Bank's 2012 Doing Business study, which was released last week. The annual report ranks the ease of doing business within 183 countries based on business-friendly regulations—including those that ease the process of starting up.
"This year, of the 183 countries we researched, 83 economies have simplified business registration into some sort of one-stop-shop approach," Solf says. And that doesn't include the United States.
In addition, 100 of those countries use an electronic process for registering a business. In 2005, only 38 countries of the 145 surveyed, or 26 percent, had a one-stop-shop approach.
According to the study, the easiest country to start a business in is New Zealand.
"In New Zealand...you have to start your business online. It's required," says the study's co-author, Karim Ouled Belayachi. "They collect the information once, and it goes into a shared database. They then submit the information to the appropriate offices. For the approval process, they basically employed computer logic to verify certain points as being compliant with the law. So, in a lot of cases, the registration is immediate."
This means that an entrepreneur isn't wasting time filling out forms (which often ask for the same information over and over) for both the tax office and customs—it's done in one step.
Another example is Macedonia, which ranks sixth in the report for ease of starting a business. According to the data, in the last seven years, the nation has cut the process for registering a company and its employees from 13 steps to three, which means starting a business takes just a few days.
A leader in East Asia, the report finds, is Malaysia. The government has set up an electronic filing system for commercial and civil courts, and has merged the company, tax, social security, and employment fund registration into a one-stop process.
Other countries that currently use the one-stop-shop model include large economies such as Canada, Hong Kong, and Singapore. Developing nations are also catching on. Rwanda ranked in the top-10 for starting a business this year, thanks in part to an online process.
"Take Tonga, for example, a small island country near Fiji," says Belayachi. "It is currently piggy-backing on New Zealand's one-stop shop. Literally. So to start a business in Tonga, you go online and your registration actually goes through New Zealand's online infrastructure. It's an innovative solution to a major problem for smaller economies."
Where does the United States stack up in this global trend? Ranking 13th in the study for start-up friendliness, the U.S. currently has most agencies an entrepreneur would need throughout the process of starting a company—such as state offices for registering a name—online. But they aren't linked together, according to the researchers.
"The U.S. is still incredibly efficient for starting a business, but there’s always room for improvement," says Solf.
And while the one-stop-shop approach is all about looking at the world through the entrepreneur's lens, there are certainly incentives for governments as well.
"The countries that we've seen use this approach for the flow of information can get a new revenue stream," says Belayachi. How? They can package and sell this information to credit bureaus and other companies that might be seeking information on companies.
That doesn't mean this strategy is a magic wand to generate entrepreneurship.
"For it to work, the country has to have the legislation in place, the cooperation of agencies, the ability to have payments online, and so on," Solf says.
So in most cases, this approach, which began to gain traction in the early 2000s, has happened in stages.
"For example, a country might first link all the agencies together on one screen, but the databases are still separate. It isn’t ideal but its a step closer to the one-stop shop," says Solf.
As for the future of global start-ups, Belayachi says: "With technology, the sky’s the limit."