Why UK Start-Ups are Staying at Home
Starting up your own business is a huge step to take in life and an incredibly exciting time as you watch your dreams and ambitions become a reality. Such a move into the unknown comes with a high failure rate, meaning that it’s vitally important to ensure you’ve planned every aspect of your new venture in great detail.
You should have a good idea about the direction you want your business to go and how you’re going to take it there, but where you decide to kick off this project is another question entirely. British communications provider Plusnet recently asked 1K UK start-up owners who’d set up their businesses in the last five years about their choices when it came to location.
Sticking with Home Comforts
The research found that over two-thirds (67%) of start-ups in the UK are set up in the city where the owner was born in. For 61% of business owners, this decision was based on the fact they already had existing connections in the city and therefore would be in a better position to successfully get their business off the ground.
58% of people surveyed cited their main reason for setting up a business in their hometown as familiarity with the area. Moving to a new city to set up your business brings all kinds of challenges, not least the time it takes to get to know the people and the place. This shows that many people are making the decision to stay in their home city and take advantage of the fact they know it so well.
Making the Choice
Aside from the familiarity and comfort of being at home, business owners showed that their decisions were based on more than just local knowledge, in fact, 36% said the city they chose was well suited for business in their industry. This shows that there are vibrant hubs for business all over the UK and the capital isn’t the only place where business owners can find a nurturing environment.
Many of us feel a certain type of pride when it comes to the place we grew up, and this has also influenced decision-making. The people of Liverpool, home of The Beatles and one time ‘European Capital of Culture’, came out on top as the most likely to be inspired by their city. 79.2% of people from Merseyside City said that their start-up had been positively impacted by their hometown.
Cost of Living
For many people in the UK, the idea of heading to London and starting up a new business is a fairytale story. However, the streets aren’t always paved with gold for entrepreneurs, and life in the big city can be financially demanding for anyone, let alone business owners. Perhaps taking this into account, 21% of people said they chose to start their business in their hometown because the cost of living is cheaper.
Considering 29.5% of respondents said that their biggest concern when starting their business was the cost of starting up, with a further 26.5% worried about the lack of a stable income, it makes a lot of sense to stick close to home where friends and family are close enough to offer support.
Success at Home
The decision to stick with the place you were born and set up a business seems to be generating successful results across the UK. 86% of the respondents who had a turnover of between £400,001 and £500,000 set up their company in their home city, with that number falling to 51% for respondents who had a turnover of £50,000. This shows that, at least in the early stages of a business, being close to home can put you at a big advantage.
It’s a trend that doesn’t look like slowing down, especially when you consider the age range of those starting up at home. 76% of 18-37-year old’s chose to set up their business in their home city, this is compared to 53% of 38-65-year old’s. If this continues, it looks like the UK will see future generations choosing to set up businesses in their home town.
This trend for setting up businesses in your home town isn’t limited to the UK. Using local knowledge and saving on costs can be defining factors when it comes to the success of your start-up in the early days, no matter where in the world you are based.