Recent years have been challenging for small businesses, with an estimated 20% increase in insolvencies in 2022, and nearly 400,000 businesses closing between 2020 and 2021.
Despite this, SMEs continue to launch new businesses. Last year saw a record for start-ups registered on Companies House, with nearly 80 new companies listed per hour in the first half of the year.
With another difficult year likely ahead in 2023, it’s important that entrepreneurs set themselves up with the best chance of success possible.
That’s why Virgin Money launched a study to reveal the UK cities with the best prospects for starting a new business in 2023, with Cambridge found to be the top ranked location.
The research ranks businesses based on a variety of key metrics, including average commuting time, innovation and internet speed:
- Commuting time (% of journeys taking over 60 mins)
- Innovation (patents filed per 100k people)
- Internet quality (average download speed in mbps)
- CO2 emissions per capita (% change 2017-2019)
- Business churn rate (% change 2017-2020)
- High street recovery rate since Covid
- Unemployment rate
- Happiness index
The Top 15 cities to start a business
- Milton Keynes
Ranking as the city with the best prospects for new businesses, Cambridge scores highly in all metrics. The city ranks in the top five for length of commute, people in employment and internet quality, and is the top ranked city for both happiness and innovation.
Cambridge is by far the best city for innovation, with 259 patent applications per 100,000 people, compared to Derby, the second ranked city for innovation, which saw 131 applications.
Edinburgh meanwhile, ranks as the second best city in the index. The Scottish capital scores well across most categories, and features in the top five for CO2 emissions, business churn rate, and employment.
Amongst the other categories, Belfast offers workers the best commute, with 0% of journeys in the Northern Irish capital reported to take more than 60 minutes. Hull meanwhile offers the best internet quality of any city, with an average download speed of 163 mbps.
In the north east, the city of Sunderland ranks as the best city in the country in terms of CO2 emissions, with an 18% reduction in emissions between 2017 and 2019, whilst Newport boasts the best business churn rate. The Welsh city saw far fewer businesses close than other locations, with a churn rate of -16%, meaning more businesses opened than closed. This is 11 percentage points better than the second ranked city of Norwich (-5%).
Elsewhere, Plymouth saw the best high street recovery in the period following the first covid lockdown, and the historic city of York ranked as the city with the highest employment rate.
Virgin Start Up customer, Victoria Poon, Founder of the sustainable speciality coffee company, Alpaca Coffee, based in Portsmouth which ranks at number five in the study, comments on the flexibility of running a business in Portsmouth whilst using London as a hub:
“Both cities are great places to start businesses for different reasons. The south coast allows you some respite from the hustle and bustle of the city, and founder mental health is so important! It’s great to be nearer nature. London meanwhile is a hub and offers some wonderful and exciting opportunities to grow the business and network.
“Both cities have become greener and more supportive of small businesses after the pandemic.”
Starting a business is by no means easy, especially in the current financial climate, and location is only one aspect that can contribute to success. Sharon Ellis, head of business networks at Virgin Money, says:
“It’s great to see cities outside of London coming out on top in the study, which adds to the evidence that businesses are investing in thriving cities outside of the capital. Location is one of the most important factors when you’re starting a business, but what else do you need to know?
“Start by mapping out your business idea, and make sure it addresses the crucial questions you’ll need to ask yourself before beginning your journey. You’ll then need to write a detailed business plan to bring your business to life. Determine whether your business brings something new to the market and conduct surveys of some potential customers. It’s good to be aware of your strengths and weaknesses!
“You should then get your finances in order and think beyond just finding the right business current account that suits your needs. Think about what options there are to help you with your finances, including data and insights tools and start-up loans. Lastly, you’ll need to market
your business. Make your company website user friendly and easy to use, and don’t forget to use social media to get the word out!”
For more information on the study, visit: https://uk.virginmoney.com/brighter-money/best-cities-to-start-a-business-uk/