The image of successful entrepreneurs has changed – gone the suit wearing business man generating his wealth from offices, factories or shops. Now any student in your local coffee shop could be creating the next Facebook or WhatsApp. Entrepreneurs today, as they were in the Victorian times, are driven by the thought that if there’s something out there that needs fixing, they can fix it by quickly developing a technological solution. This disruptive economy sees students develop an idea, turn it into a business and exit all within their summer holiday – they return to university to complete their degrees as successful digital entrepreneurs. I’m exaggerating, but you get the point.
This democratisation of entrepreneurship; opening the concept to younger audiences with less traditional business experience is undoubtedly what the UK economy needs today, yet there is still room for improvement. Entrepreneurship isn’t something that just happens in HTML code, to those in suits or within London’s ‘Silicon Roundabout’.
As our most recent Entrepreneurs Index report, developed in conjunction with Business Growth Fund (BGF) reveals, entrepreneurial activity in the UK today has a range of fascinating regional nuances and sector stories.
The results show that the economic recovery is not just being led by London and is not just confined to the technology sector.
This is our fourth Entrepreneurs Index report. It tracks the full entrepreneurial lifecycle from start-up to growth and selling, by measuring the number of active companies and enterprises, the proportion of high-growth companies and the number of companies recording share sales. We then crunch all of this data – some publicly available, others created specifically for the Entrepreneurs Index – by UK region and industry sector.
We found that while the capital is still home to by far the highest number of start-ups, dwarfing the next most active cities with 136,939 new businesses registered in London during 2013, compared to 16,281 in Birmingham and 11,765 in Manchester[i], other regions are proving to be very effective at fostering high-growth entrepreneurial companies[ii].
For example, Wales, the Midlands and the North West have all seen much more significant growth in the proportion of high-growth companies than London. With the proportion of high-growth companies rising by 66% year-on-year in Wales, by 54% in the Midlands and 44% in the North West respectively, it is clear that the central regions of the UK are becoming hubs for these types of successful ventures. While still impressive, the corresponding rise in high-growth companies in London is 17%.
The report also shows that the biggest proportionate increases in high-growth companies have been in more ‘traditional’ sectors, such as construction (55% rise), manufacturing (47%) and transport (37%). While the tech sector undoubtedly remains integral for the UK economy, its biggest increases at this stage come from the number of start-ups, rather than high-growth companies.
The future may be in the ‘new economy’ of technological and digital innovation, but these findings show we would be wrong to discount the ‘old economy’.
In the wake of the financial crisis, policy makers and business leaders have repeatedly stressed the need for economic growth to be more balanced across every region of the UK. If the economic recovery is to be sustained, entrepreneurs need an environment in which they can start and grow successful ventures anywhere in the country. They need access to funding and talent, policies that remove growth barriers, and support networks to guide and encourage them onto a strong growth trajectory.
We are certain that we can bolster these elements to support entrepreneurial growth and we are committed to helping to foster these fundamental frameworks across the UK.
[i] Start Up Britain
[ii] We measure the proportion of high-growth companies through Experian data and we class a company as high-growth when an SME with revenues of between £2.5m and £100m increases its turnover by 33% over the preceding three years, and produces 10% year-on-year growth for a minimum of two of these years.