Forget Silicon Valley: starting a business in Turkey
When entrepreneurs think about startup hubs, Silicon Valley or perhaps Seattle spring to mind. However, with a young population driving steady growth, increased investment and improved infrastructure, a number of would-be entrepreneurs are looking to Turkey as a possible destination for their business start-up.
In 2016, some 4523 companies were set up by foreigners, with 1764 of those established by Syrians. That's a fairly large share - 7% in fact - of the 63,700 companies established in Turkey last year.
Istanbul in particular is attracting interests from start ups. It's already the regional centre of a large number of multinational companies, has a unique location and offers great living standards with top research universities, effective incubation centres and advanced mobile and internet services.
If you’re building your low-tech business from the ground up, building a new product or starting a service business, the best place to be is in a newly industrialised country with a young, consumer-driven population. Turkey is a prime example of such a newly industrialised country with all the necessary infrastructure and bureaucratic processes for a small business. The difference between investing in an established startup hub and Turkey is that in a city like Antalya, Izmir or even Istanbul, a very small investment on a good idea can really take off.
As part of its drive to increase foreign investment in Turkey, the Turkish government is set to make living and working in Turkey easier for foreigners, with certain incentives and tax breaks for foreign business owners and workers. Stay tuned to find out more.
Here´s why starting a business in Turkey is a great idea
1. The country´s unpredictability means there´s a great many chances for entrepreneurs
To many people, a country’s inner turmoil might seem a turn-off, to an entrepreneur it’s a huge advantage. Constant flux in society and the economy brings opportunities as investors use the changes to their advantage. Turkey is in the middle of an evolution, from a developing country to a world economic leader. The time for jumping on board with new ideas has never been better.
2. There´s a lack of competition
While long-established markets have highly polished products and customer service, developing markets are still feeling their way along. Setting up a business in Turkey with a great product or service and complementing this with top customer service is an easy way to exploit a gap in the market and establish yourself as an industry leader.
3. Turkey´s population is young and mobile, with a growing disposable income
Turkey’s growing middle class are young, increasingly educated and solvent - and their consumer share is growing every year. Young Turks love good brands and technology and new trends take off quickly. If your product and service is high quality it could do very well in Turkey - as other luxury brands are finding out.
4. High retail prices mean there´s room for lower priced brands
The retail prices for products are slightly higher in Turkey than elsewhere. Tax and customs fees bump up the cost of goods, which means your locally-built brand can be sold at a competitive price, still leaving you a high margin even though your product is priced lower than the competition’s.
5. Operating costs are low
This is one aspect of starting up a business in Turkey that really will save you some money. As well as the low cost of rents and overheads, there’s a wealth of low-cost suppliers who lack brand visibility but still have excellent generic products. And when you need a work force, it’ll be easy to recruit from the growing pool of graduates who enter the market this year. Salaries and wages are also low, but climbing steadily.
6. Local manufacturers are low cost and receptive to ideas
Turkey’s economy was built on industry, which means it’s usually simple to find local manufacturers. Take a translator and pay them a visit. You’ll find local manufacturers are generally receptive and easy to work with - and what’s more, having a prototype of your product made up is cheap, with some factories not even charging for this service. And of course, the cost of having these products made up is also low, allowing you to self fund your own product.
7. Fresh eyes in a new market
In a developed country we’re saturated with goods and services and it would take a game-changing product to get noticed. However, in Turkey there are opportunities at every turn. As foreigners with fresh eyes, we’re uniquely placed to spot any gaps in the market. A number of entrepreneurs have found success replicating successful business models that have worked in other countries.
8. There are opportunities for venture capital
As recently as 2010, venture capital funding didn´t even exist in Turkey. Now, there´s $200 million in capital dedicated to internet startups alone.
The wave of success experienced by local entrepreneurs has seen investors take an interest. International investors like the Middle Eastern company Abraaj, the UK´s General Atlantic and Naspers from South Africa have all backed Turkish internet entrepreneurs, and a number of international investors with local teams are on the lookout for the next big success story.
The public sector is also taking an interest in start ups. As well as government departments funding specific research and development, the government has established a funds program of up to $165 million to provide new and existing venture capital funds with more investment capital.
A few tips to get you started:
- Learn the local business culture: while foreigners are treated well in Turkey, Turks might not be so willing to explain to foreigners the way business works, so you´ll need to do that groundwork on your own. Turks conduct their business affairs in a different way to the rest of the world, and there´s often a lack of transparency in the business world you´ll need experience to navigate.
- Expect competition: while there are plenty of gaps in the market, Turkey´s skilled workforce is growing. It´s not enough to simply move to Turkey thinking you can do better.
- Grow your network: doing business in Turkey is, like in many places, who you know. Make contacts wherever you can.
- Learn Turkish: it´s not possible to grow your network without learning the lingo necessary to communicate with local clients. Translators will only take you so far.
- Consider operating in a Free Zone: these defined areas offer special regulatory treatment like tax breaks, and no VAT or customs duty. They´re designed to promote exports of goods and services. Free Zones can be found in most Turkish cities.