Barriers to setting up a new business in Malta : an analysis

Abstract

PURPOSE: This study aims to identify the difficulties encountered when setting up a new business in Malta. The study explores the measures that are in place to help with the starting up process. Finally, it looks into the bank’s perspective regarding the process and requirements of the bank when granting finance to start-ups. DESIGN: The objectives of this study were reached by sending an online questionnaire to businesses which are in the process of starting up or which recently started operating. Furthermore, interviews were conducted with incubator representatives and with bank officials. FINDINGS: Maltese entrepreneurs want to start their own business because they want to pursue their own idea. The main difficulty experienced through the start-up process is lack of confidence in one’s own ability to start a business. Other barriers mentioned, were lack of skills and experience, complex administrative procedures, lack of finance and market information, and finding sufficient time to start the business. An entrepreneur may find assistance through Malta Enterprise, incubators and online communities. Lastly, the bankers stated that in order for businesses to obtain bank financing they need to provide a clear description of their purpose and have collateral. CONCLUSION: It can be concluded that Malta has an economic climate that is ideal for start-ups, as there are many schemes and institutions to help with the setting up process. Improvements are being made with regards to the process of registering and obtaining permits and licenses. Furthermore, lack of finance was not perceived as a barrier to entrepreneurship. VALUE: This study can be used to create policies to eliminate or mitigate the barriers to entrepreneurship. Furthermore, those businesses that are in the process of starting up can use this research to see what assistance is available to them. Lastly, this study will provide businesses which want to obtain bank financing, with an insight into what is required from them.