The eye-watering costs associated with setting up a business is one of the common deterrents for entrepreneurs.
But what if they could squash some of the biggest financial burdens by simply changing their HQ address?
A new study by Utility Bidder has revealed the most affordable cities around the world for setting up a business by evaluating everyday running costs.
Through assessing salaries, office costs, electricity, internet and corporate tax across Organisation for Economic Co-operation and Development member countries, the ‘Comparing The Cost Of Running A Business Around The World’ study compared the prices of setting up a business in 70 cities.
Budapest was found to be the least expensive place to set up a business. It also ranked as the cheapest location for corporate tax where companies pay a rate of 9%, according to Utility Bidder.
The UK based company, which compares utility costs for companies to reduce their bottom line, gave each city a normalised overall score out of 100 based on the results for each of the five factors, then took an average overall score across all the factors.
At the other extreme, San Francisco was listed as the most expensive city to set up a business, followed closely by New York City and Tokyo. Out of the top 10 most costly places to establish a company, the US was also home to four other locations: Boston, Washington D.C, Chicago and Los Angeles.
Top 10 cities for setting up a business*
- Mexico City
- Tel Aviv
Hungary’s picturesque capital was ranked by Utility Bidder as the leading city for setting up a business.
An average salary of £15,600, average office cost of £33.51 per square feet and corporate tax rate of 9% makes Budapest one of the most affordable places for startups.
The city recorded an overall score of 90.72, streaming it well above other locations.
With an average price of £0.07 for electricity per kWh, it’s no wonder Prague is considered among the top leading cities for setting up a business.
The Czech Republic capital’s colourful baroque buildings and Gothic churches could be the next popular destination for entrepreneurs as it was given an overall score of 83.91.
In Prague, the average salary is £20,230, monthly internet cost is £17.35 and the average office cost per square feet is £34.81.
Poland was ranked one of the best countries for investors earlier this year, so it’s fitting the capital is also considered a hot spot for startups.
Affordable electricity, salaries and office spaces lands Warsaw as the third best city for setting up a business.
While Warsaw’s corporate tax rate is slightly higher than other affordable cities at 19%, its overall score was 82.20.
Not far behind Poland for new business ventures is Bratislava.
The Slovakian city isn’t just affordable with its average office cost of £23.30 per square feet, it’s architecturally beautiful as well.
With an overall score of 78.13, the historic destination makes for an affordable and culturally enriching business headquarters.
Nestled on Finland’s southern coast, Helsinki is the first most affordable city for setting up a business in a country that isn’t landlocked.
Of the top 10 least expensive cities for startups, Helsinki has the second-highest average salary at £42,770 and an average office cost of £51.14 per square feet.
The Scandinavian city recorded an overall score of 70.89, according to the study.
With an average salary of £13,032, Mexico City has the lowest average salary of the cities analysed by Utility Bidder.
The population-dense location also ranks affordably for electricity at £0.12 per kWh.
On the contrary, the Mexican capital has the highest corporate tax rate per cent of the top 10 cities at 30%.
The Spanish gem may be known as a hub for science and arts, but it’s also ideal for entrepreneurs.
With an average salary of £26,390, average office cost of £18.48 per square feet and a monthly internet cost of £33.06, Valencia received an overall score of 69.83.
It may have been the birthplace of the ill-fated Titanic, but Belfast is now considered one of the most affordable cities to set up a business.
Utility Bidder found the Northern Irish destination to have an average salary of £27,000.
With a monthly internet cost of £27.59 and an average office cost of £34.30 per square feet, it received an overall score of 69.83.
The second Spanish city to make the top 10 list, Malaga follows closely behind Belfast in terms of average salaries.
The study found the location had an average wage of £27,300 and a corporate tax rate of 25%.
It was with the office space cost of £18.25 per square feet that it ranks favourably – making it the cheapest among the top 10 cities.
Described as one of the world’s innovation hubs, Tel Aviv came in 10th position according to the study.
The Israeli city has the highest average salary of £44,620 of the top 10 list as well as the highest office space cost per square feet, which was estimated to be £62.21.
Tel Aviv also ranked fairly well for electricity, adding to its overall score of 68.83.
*according to Utility Bidder