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Is London really the best place for your business venture? – words Alexa Wang
London may seem like the obvious place to launch a new business venture in the UK, thanks to its vast, diverse population and position as a hub for the world’s biggest brand names. However, setting up in the Big Smoke does have its drawbacks. London is the world’s third most expensive city for startups to launch, with Savills estimating costs of £76,115.46 per employee. In fact, in the West End, you could be paying £207 a year just for the space required to keep a laptop on your desk.
There is also serious competition for office space in London. London officials warned last year that many smaller, cheaper offices were likely to be converted into residential properties in order to subsidise the housing crisis, and a third of the UK’s office-to-residential conversions have been in London. The paper expressed concerns regarding the impact this could have on small firms in sectors like the technology and creative industries.
While London is still a popular destination for new businesses to establish themselves, many entrepreneurs are now setting up further afield. A study by the accounting and audit firm RSM revealed that 2017 saw a 78% increase in the number of startups in North East England, 77% in Scotland, and 73% in the West Midlands. Therefore, when it comes to launching your business, doing so outside of the capital could have many major benefits.
Suitable industry infrastructures can be found outside London
Depending on the industry you work in, London may not provide the best infrastructure for your business. Though London is known for its tech scene, centred around Old Street’s so-called Silicon Roundabout, Edinburgh is also thriving as the fastest growing tech hub in the UK in 2017. The Scottish capital is home to a number of successful technology companies such as Skyscanner and Ice Robotics, and one reason for its impressive reputation is the world-class computer science programmes on offer at The University of Edinburgh. Best of all, a professional working environment there costs a fraction of a London-based equivalent; businesses could own a fully furnished private office in Edinburgh for as little as £270 a month.
Likewise, already home to over 700 aerospace companies, including Rolls Royce, Derby could be the perfect place to start an aerospace venture. The city is renowned for its aerospace expertise. These businesses employ over 45,000 people in total. Meanwhile, Leeds is an attractive prospect for those looking to crack the financial sector, with over 200 accountancy firms and more than 30 national and international banks located in the city. Employing over 124,000 people in the sector, Leeds is actually the second largest financial city behind London.
There are significant talent pools across other regions
While London is undoubtedly full of talent, the rest of the UK is brimming with expertise that could prove valuable to your new business. Cambridge, for instance, is leading the country when it comes to new patent applications, with three times as many published per person in 2017 as the second closest city. Cambridge also has the most residents with high-level qualifications of all UK cities, at just over two thirds—a fact easily attributable to how many university students continue to reside there after graduating. With just 50.7% of residents with high-level qualifications, London is also beaten by the likes of Oxford (60.9%) and Aberdeen (52.6%).
Thanks to London’s extortionate living costs, the number of millennials leaving the city is at its highest level in decades. According to figures from Centre For London, the number of 25-34-year-olds in the capital dropped by approximately 30,000 between 2016 and 2017. Hence, top companies are making the most of young talent flocking to other regions of the UK. For example, Amazon recently created over 1,000 highly skilled jobs in Manchester, Edinburgh, and Cambridge. Furthermore, areas such as Yorkshire & Humber, the West Midlands, and Northern Ireland are all creating small and medium-sized enterprises (SMEs) at a higher rate than London.
Plenty of UK cities are ideal for business growth
SMEs in many cities outside of London boast extremely high chances of success. Since 2012, the South West of England was the region with the highest five-year survival rate, but for businesses founded in 2016, it was the East which had the most success at a huge 96%. London, on the other hand, has had the lowest five-year survival rate since 2009, standing at 39.3% in 2017.
There are also plenty of organisations outside of London which are happy to support new local businesses. For example, Birmingham City Council has introduced a range of funds and initiatives for small and medium-sized companies looking to develop. This includes the Creative Fund, offering between £50,000 and £500,000 funding to creative startups.
Meanwhile, The Coventry and Warwickshire Local Enterprise Partnership contains the third-largest proportion of gaming companies in the UK, with local universities providing useful facilities to those starting out. The University of Warwick’s Science Park includes laboratory space, incubator apparatus, and access to financial and technical marketing support, whereas Coventry University offers a Technology Park full of office space and support services. These include business mentorships, product development, and international expansion.
Brexit chaos could make an international city more appealing
It’s still very unclear how the UK will be affected by Brexit, and the process thus far has resulted in much uncertainty for businesses. A recent survey conducted by the Institute of Directors revealed that one in three UK firms plan to relocate abroad, while 10% have already set up operations overseas, as a no-deal Brexit becomes more likely.
Therefore, as the future of business in Britain is extremely unclear, you may want to consider launching your startup elsewhere. Japan, Germany, and the USA were voted the best countries for entrepreneurship in 2019, while a recent survey ranked Tallinn, Estonia as the best city for a millennial to start a business. The Estonian government even launched an initiative called the Estonian Startup Visa in 2016, helping non-EU founders to grow their startup in Estonia while allowing Estonian startups to hire non-EU talent.
London still has its perks, and some entrepreneurs will still insist on it being the perfect place to start a company. However, it might not be the best place to launch your business. With more exciting business hubs ever than before, widening your search could unveil the perfect startup location with an edge on the capital.
To learn more about Landmark’s range of serviced offices outside of London, contact us today.