A recent report conducted by Vodafone Business found that the latest government figures revealed that there is a far higher representation of SMEs in London than any other region – with 39% of all SMEs being based in the city. To put that into perspective, the next largest region for representation of SMEs was the South-East, with just 14%.
Though London does have a higher population than other regions, there must be other reasons for the high number of SMEs based in the region.
The latest ‘Disruptive Minds’ webinar hosted by the Great British Entrepreneur Awards and Vodafone Business saw a group of SME founders discuss the topic of the overrepresentation of SMEs in London, investigating why there is such high representation there, and how we can create more opportunities and encourage more SMEs in other regions.
Kicking off the conversation around why businesses choose London, Lucy Cohen, Co-founder of Mazuma, said, “I think it’s the really obvious thing that it’s the UK capital.
“When you’ve got this dense population with a lot of people from diverse backgrounds, it just makes sense that more businesses are starting per capita – then you end up with this self-perpetuating thing where, because there are more businesses there, more support goes into that region, and so the cycle continues.
“However, in terms of what is appealing about London, there is a bit of chicken and egg. Everyone thinks London has got all the best transport infrastructure, as it’s relatively easy to get around there. It’s also quite a central place, so if you’re coming from other parts of the UK and you need to meet somewhere that is convenient with easy travel routes, London is that place.”
The benefits of other regions
Discussing how regions other than London are great to set up a business, Christopher Kenna, CEO and Co-Founder of Brand Advance, who has offices across the UK and Europe, told us about his experiences with Manchester, and why he thinks it’s a great place to be for business.
“From working in London and building the company up over the last few years I’ve found that the Northern accent is believed. So I can go into meetings in New York and it doesn’t matter who we’re against, they always believe in what we’re going to do and what we say we’re going to do. Growing up the accent made people think you were poorer and dumber, but now it’s an absolute superpower – you can say that for a lot of regions outside of London.
“People in Manchester have a willingness to help and to talk, which you don’t get in bigger regions like London. You can live in London, a city of 9 million people and no one can ever speak to you on the commute that you do everyday for five years. But you go to Manchester and if you don’t speak to people, they think you’re weird.
“Regions like Manchester have far more engagement,” he finished.
Alison Edgar MBE, The Entrepreneur’s Godmother, also agreed that Manchester is a great place to set up a business. “??My son’s in Manchester and he’s not coming back, he just graduated and he’s got a job up there already. It’s really nice to see that the talent is there. This Northern Powerhouse does really well to try and move things further North, specifically for women in business.
“There have been changes in how businesses are supported. In 2016 there was a decentralisation of the funding that was going into London when they created the LEPs. I think there was a bit of a shift to try and regionalise the support. But to me, that came with its positives and its negatives, because there was no standard of support. It’s become a bit like the postcode lottery, if you’re in a great area you might get better access to funding, and if you’re not you may struggle to get funding.”
What makes a region attractive for new businesses?
Discussing what a region needs to make it appealing to new businesses, Lucy Cohen said, “Community!”
“Running a business can be incredibly lonely, even if you’ve got colleagues or you are in a co-working space. What you are going through is very personal and it’s likely that friends, ex-colleagues and family won’t really understand why you’ve done this – risking a lot and setting up a business.
“I remember going out for drinks with other people who’d run businesses, when I first started out, I’d share stories and struggles and they’d tell me they’ve experienced the same. This is so important – I think potentially more important than funding and all that other stuff. Having people around continuously who understand you and keep you motivated is crucial.”
She also went on to discuss the importance of co-working spaces. “16 years ago I wish there’d been the kind of co-working spaces that exist as they do today because they are fantastic. I was at Tramshed Tech recently, which is a brilliant co-working space in Cardiff.”
What can be done to encourage businesses in other regions?
Christopher Kenna, said “The Government could do a whole lot more. We need to make sure that we’ve got access to funding for Government subsidized co-working spaces.
“We seem to have pulled out a whole lot of money for COVID, so there is money around. We can go and find some to help the small businesses in the regions outside of London!”
“Also, I hadn’t been to University, there wasn’t a lot of help that wasn’t available to me, as much as there was for graduates. The most I could get was £500 from the Prince’s Trust. So, I think there could be more done and especially for underprivileged communities.
A large percentage of new companies registered at Company’s House has been registered by someone classified as ‘non-white’ – but the help isn’t going to those communities. I think that should be taken into consideration, rather than just looking at it as a region, thinking about how can we help the underrepresented here? This way far more businesses are going to feel comfortable to start a business in their region.”
It is clear that there is so much potential for regions outside of London to get on top of the small business scene – but it is vital that there are resources and support put in place that can help do this. Government funding is a common subject that occurs when discussing why businesses are drawn to London, as it is seen to be supported more than other regions – so it’s time to do more for SMEs in smaller regions.
To hear the full conversation, and find out more about what can be done to encourage more SMEs in other regions, watch the full conversation here.
The next Disruptive Minds webinar will discuss ‘How tech has paved the way for SMEs – and whether being an early adopter or an innovator gives you an advantage against those otherwise?’
The session will take place on 22nd September 2022 at 11:00 AM – Book your free space here to watch and get your chance to ask the experts some questions.