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Top UK Destinations for Starting a Small Business
January 15, 2024
The UK is home to thousands of startups and is generally considered a great place to launch a new venture. There are some cities that are particularly well known for their thriving entrepreneurial communities. These are places where investors flock, where events help businesses grow, and where the number of potential customers is large. Moreover, local authorities can influence small businesses by providing support, resources, and opportunities for development.
A recent study by Qardus highlights how the fortunes of businesses vary depending on the location. Based on data from the Office for National Statistics, this analysis shows where small businesses find opportunities and face challenges. This article focuses on the best UK destinations for starting an SME.
Read also the article “UK’s SME Tax Breaks Intensify Golden Triangle’s Growth Inequity”.
Which Factors Were Used to Rank the Local Authorities?
Local authorities typically offer business support by providing guidance on starting and managing a business, supplying information about funding opportunities, reconsidering business rates, or organising local hubs and networks. To learn where SMEs are thriving or struggling, Qardus researchers used a methodical approach.
They examined six key indicators, including:
- the Active Enterprise Change between 2021-2023,
- the birth and death rates of new enterprises from 2020 to 2022,
- the growth of high-impact enterprises,
- and the three to five-year survival rates of SMEs.
Then, researchers translated these metrics into a comprehensible score out of 100. This approach, coupled with a strategic weighting system for each metric, allowed for a profound ranking of local authorities. Importantly, the lowest scores mean the best conditions for starting a business.
Where to Launch a Small Business: Research Results
Let’s go straight to the results of the research and explore what was found out about the conditions for doing business in the UK.
Ceredigion, a unitary authority in Wales, proved to be the most SME-friendly environment, with an impressive score of 29.03 out of 100. SMEs such as beauty salons thrive here the most. This score indicates a steady survival rate for SMEs in the region — 67.44% over three years and 55.81% over five years.
You can see the scores of other local authorities in the table below.
Similar conditions for SMEs, according to the study, are in Selby, South Staffordshire, South Hams in Devon, and South Derbyshire. Each of them scored less than 30 points. This data shows the dynamic development of SMEs in these regions, making them thriving centres for entrepreneurial ventures.
In contrast, Bromsgrove presents a very different picture. With a score of 80.75 out of 100, it has emerged as the local authority where small businesses face the most significant barriers. A sharp fall in SME registrations of 30.22 per cent between 2021 and 2023 and a paltry five-year survival rate of 5.81 per cent paints a worrying picture for Bromsgrove’s SME sector.
Rochdale, Worcestershire, Bury, and Rossendale also rank high on the list of challenging conditions for SMEs. Here are some more local authorities with unfavourable business environments:
This research is not just a collection of statistics; it’s a story about the real challenges and opportunities of the UK’s SME sector. It emphasises the importance of local conditions and support systems in determining the success of small businesses. Startups may find Ceredigion an ideal location, given its high SME survival rates and favourable business environment, but they should avoid places such as Bromsgrove.
What Are Other Good Places to Open a Small Business? Other Studies
A 2023 study published on the website of Robin Waite, a leading business coach in the UK, has revealed that there are 12 cities in the UK where it is best to start a business. Among them are:
- London is a thriving centre for businesses of all kinds;
- Manchester, a centre for technology and digital businesses;
- Bristol, with its developing creative and digital sectors;
- Birmingham, a centre for startups in the tech and digital sectors;
- Glasgow, with a strong creative and cultural scene;
- Edinburgh, with a strong entrepreneurial community in the tech and creative sectors.
Virgin Money also posted data on this topic in 2023. Experts believe that Cambridge is the number one place to start a business, as they consider metrics like commuting times, internet quality, innovation, unemployment, and even CO2 emissions and happiness rates. The Scottish capital, Edinburgh, is the second-best city, followed by York, Oxford, and Portsmouth.
Several studies, including those by Techtah and Nerwallet, mention Leeds as a promising place to launch a startup, especially if you offer financial and legal services. This is due to its high 5-year survival rate and active business population.
Stay Supported with Payrow
Payrow is a platform that offers a payment solution built by a team with extensive experience in finance and startups. Our mission is to increase the number of entrepreneurs in the UK and help them grow their businesses. To do this, we are committed to providing access to relevant, affordable, and paperless money management tools.
The solutions don’t just work locally and are suitable if you decide to go global. We have implemented advanced security protocols to ensure that the funds in users’ accounts are secure. Wherever you decide to open your small business, the Payrow team will be happy to make it easy for you to manage invoices, taxes, and bill payments.