There has been an estimated 20% increase in insolvencies in 2022, while nearly 400,000 businesses closed between 2020 and 2021.
However, small and medium-sized businesses (SMEs) have continued to launch. Last year saw a record for start-ups registered at Companies House, with nearly 80 new companies listed per hour in the first half of the year.
With another difficult year to come in 2023 as Britain enters a technical recession, it is important for entrepreneurs to set themselves up with the best chance of success possible.
A new study by Virgin Money looked into the best locations to start a business in the new year.
According to their research, Cambridge was crowned as the number one place in the UK to start a business in 2023.
The research considered metrics that would be useful for businesses, including commuting time, internet quality, innovation, happiness, high street recovery rate, CO2 emissions per capita, business churn rate, and unemployment.
The city ranked 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 was 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 was the second best city to start a business. The Scottish capital scored well across most categories, and featured in the top five for CO2 emissions, business churn rate, and employment.
The bronze medal went to York, with Oxford and Portsmouth coming in fourth and fifth respectively.
Virgin Start Up customer, Victoria Poon, founder of sustainable speciality coffee company, Alpaca Coffee, based in Portsmouth commented on the flexibility of running a business in the city 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,” she said
“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.”
Read more: 2022: Year in review
Rounding out the top 10 were Aberdeen, Plymouth, Swindon, Southampton and Exeter.
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.
Meanwhile, Hull offers the best internet quality of any city, with an average download speed of 163 mbps.
Watch: How to prevent getting into debt
In the north east, the city of Sunderland ranked as the best city in the country in terms of CO2 emissions, with an 18% reduction in emissions between 2017 and 2019, whilst Newport in Wales 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, 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.
Sharon Ellis, head of business networks at Virgin Money, said: “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.”
She added: “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.
“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.”