The best place to start a business in the UK

Diverse group of ecstatic businesspeople cheering together over a winning idea while brainstorming with sticky notes on a glass wall in a modern office

Starting a new business can be challenging. Even with countless hours of research, planning and budgeting, there is no guarantee that your new venture is going to be a success. There are all manner of factors that ultimately contribute to your success or failure – some of which you can control and others you can’t.

One factor that has traditionally always been important is location. This has been especially true if you sell your goods or services from a shop or premises and rely on passing trade. For example, if you open a sandwich shop in an area that has very little foot traffic, then it’s unlikely you will make a great deal of money.

But what about geographical location? Does where you launch your new business influence how successful you might be? According to a recent study, it does.

New research conducted by cloud accounting company Ember has revealed the top 10 locations in the UK to start a business. The factors included the average rate of new business births compared to new business deaths, the number of high growth enterprises, the median salary, and the working-age population’s qualification levels.

Where is the best place to start a business in the UK?

The study assessed more than 350 districts, counties and unitary authorities across Britain and reveals that the Worcestershire town of Redditch is the best place to start a new business in the UK, after scoring highly in several key indicators for business success.

One of the indicators it scores particularly well in is the rate of new business births compared to new business deaths – the number of new businesses that open vs the number of businesses that close.

In 2019, two new startups were launched for every new business that closed – the second-highest ratio in Britain. Another factor in Redditch claiming the top spot is its low median salary, enabling companies to employ workers at a lower cost than many other UK areas.

Redditch. United Kingdom on a geography map

In the second spot, also in the county of Worcestershire, is Wyre Forest. Taking its name from the Forest of Wyre, which is now a popular visitor attraction, the district consists of large areas of rural countryside and the towns of Bewdley, Kidderminster and Stourport-on-Severn. It secures second place on the list thanks to the country’s best rate of new business births compared to deaths, with three new companies started for each one that failed.

Kingston Upon Hull, the UK’s Capital of Culture in 2017, is ranked in third place. The city performs particularly well in the categories measuring the number of successful businesses in the region and having a median wage lower than much of the UK.

The results for the top 10 are as follows:

National rank Area County/Region Overall rating
1 Redditch Worcestershire 8.145
2 Wyre Forest Worcestershire 8.020
3 Kingston upon Hull East Yorkshire 7.854
4 Corby Northamptonshire 7.849
5 Telford and Wrekin Shropshire 7.834
6 Burnley Lancashire 7.796
7 Kensington and Chelsea London 7.779
8 Thanet Kent 7.774
9 Southwark London 7.770
10 Westminster London 7.770

In contrast to the overall rating of 8.145 for Redditch, Barrow-in-Furness ranked at the bottom of the list with an overall rating of 5.867. It is the only area in the study in which none of its businesses registered as high growth enterprises, defined as a company with average growth greater than 20% per annum over a three year period.

Not faring much better, in second to last place, is Copeland in Cumbria. It has a low rating for its proportion of high growth enterprises, while its median salary is the second-highest in the study. This shows the challenge that location can pose for new business ventures as any prospective employees will want to be remunerated based on the average salary for the region.

The Shetland Islands was third last, mainly because for every two new businesses that were started, three businesses failed.

Commenting on the study, Ember co-founder Daniel Hogan said: “There are so many factors that go into building a successful business, so it’s intriguing to crunch the numbers and see which areas perform best across multiple metrics. Any person who decides to start their own business deserves the best chance of success.”

The figures follow news uncovered by Ember that the first quarter of 2021 saw nearly 100 new businesses created every hour. In total, 211,368 companies were incorporated at Companies House in January, February and March this year, which equates to 2,349 brand new businesses each day, or 98 every single hour.

What to think about when deciding on a location for your business

This study shows that location can be hugely important when considering where to base your new business. If you are thinking of starting a new business, here are some factors you should consider.

  • Rental costs: If you need to lease a storefront or set up business premises, consider how much you will have to pay for your rent. If it’s too expensive, a large chunk of your income will go towards paying your rental overheads.
  • Talent pool: No matter what industry your business is in, you want to attract qualified employees who can help your company grow and succeed. If you think you might struggle to fill vacancies due to a shortage of skilled candidates, then you may want to reconsider where you are going to be based.
  • Average salary in the region: It makes sense that in more affluent areas and regions with a large proportion of high paying jobs, the average salary is going to be higher. Do your research when deciding on where to set up your business. Quite simply, if you aren’t prepared to offer the same salaries as your competitors, you won’t attract the best candidates.
  • Competitors: Some competition is healthy. Too much, however, and the market becomes saturated. Make sure there is enough desire for your product or service before you choose an area to launch your business. Unless you out-perform all of your rivals or offer something that none of them can, you may find yourself struggling.