Microbusiness Megastars 2023 – Data analysis: 68 best UK towns and cities for startups & entrepreneurs

Last updated on 9 March 2023

Small businesses are often touted as the backbone of the British economy, and here at Business Financed we are certainly advocates for entrepreneurialism and startup business culture.

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Government statistics state that there were 5.5 million private businesses in the UK last year, and 99.9% of those (5.47 million) were classified as ‘small’ businesses, meaning up to 49 employees.

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But to the average sole trader or entrepreneur just starting out, it might feel like a gargantuan achievement to reach 49 employees.

And that got us pondering: what about the even smaller businesses?

Across the length and breadth of the UK, our nation’s history is marked by the creative and bold people who strived to establish their own business enterprise. But where is that happening now?

Which towns and cities are the leading hotspots for entrepreneurs, startups and very small businesses?

We decided to look at the data and find out.

Business Financed set out to find and rank the places across the UK where there is the highest concentration of thriving microbusinesses and self employed people.

The outcome was a comprehensive shortlist of 68 locations where microbusinesses are most prevalent and most thriving.

Surprising details

After crunching the numbers, some of the results surprised us. For example, did you know…

  • With a 51% survival rate, Basingstoke is the only UK location where a startup business is more likely to succeed than fail?
  • Chester has by far the most microbusinesses per person, where more than 1 in 10 people are employed by one?
  • Despite being our capital and largest city, London only barely ranked in the top 20 for microbusiness success?

Contents

Results snapshot – Top 10 infographic

Microbusiness infographic

What is a microbusiness?

Opinions on a definition will vary, but for this study we used the following criteria:

  • Employs no more than 4 people
  • Is large enough to be registered for VAT, PAYE or both

Notable findings

The spread of the microbusiness hotspots across the UK was dominated by England:

  • Northern Ireland – 1.5% (1 location)
  • Wales – 2.9% (2 locations)
  • Scotland – 5.9% (4 locations)
  • England – 89.7% (61 locations)

And within the top 10 locations, nine were in England, showing a visible trend.

Of those nine English locations, there was a good spread across the regions, with no single part of England coming out decisively on top.

In Scotland, Edinburgh came out on top (managing to rank 7th overall in the UK), Aberdeen appeared mid-table at 31, while the smaller city of Dundee only marginally lost out to mighty Glasgow, appearing just one spot below, in positions 60 and 61.

Belfast did a strong job representing Northern Ireland, just missing out on a top 20 position.

And in Wales, Cardiff performed better than rival Swansea, landing much closer to the top of the table.

Top 30 UK locations for microbusinesses

  1. Bath & NES
  2. Chelmsford
  3. Cheltenham
  4. Exeter
  5. Chester
  6. York
  7. Edinburgh
  8. Maidstone
  9. Worcester
  10. Thanet
  1. Peterborough
  2. Brighton and Hove
  3. Basingstoke
  4. Eastbourne
  5. Lancaster
  6. Basildon
  7. Norwich
  8. Greater London
  9. Cambridge
  10. Warrington
  1. Bedford
  2. Belfast
  3. Northampton
  4. Slough
  5. Bristol
  6. Colchester
  7. Swindon
  8. Milton Keynes
  9. Gloucester
  10. Oxford

Community response

We invited business leaders, academics and public figures from the top locations to respond to the news that their home had performed strongly in the research.

Bath & NES (1st place)

Councillor Richard Samuel, deputy leader and cabinet member for resources at Bath & North East Somerset Council

“It’s excellent news that Bath has come top of the Microbusiness Megastars list. Whether you’re a start-up or a large enterprise, the city is an inspiring place to do business with its highly-skilled talent pool, excellent links to London and Bristol and a thriving economy. There’s also plenty of support available from our Invest in B&NES team to help you grow your business.”

Ian Bell, Executive Director, Bath Chamber of Commerce and the Initiative in B&NES

“This is a great accolade for all our brilliant and creative entrepreneurs who have shown tremendous courage to start their own businesses, establish themselves and grow. We’ll continue to make the case for more employment space so they can develop their businesses and contribute to future sustainable economic growth.”

Chelmsford (2nd)

Councillor Simon Goldman, Chelmsford City Council’s Cabinet Deputy for the Economy and Small Business

“As one of the UK’s youngest and growing cities, Chelmsford is proudly home to over 9,000 businesses and offers the potential to become home to many more. The entrepreneurial spirit is garnered through our work with local universities and colleges to help nurture talent and create a skilled workforce for the future. The City Council works closely with small businesses to provide business support and guidance. We want to ensure everyone that needs or wants it, has access to opportunities to grow and succeed. We’re very proud Chelmsford features so highly in the list of microbusiness superstars.”

Jenny Young, Director of the Research and Innovation Development Office at Anglia Ruskin University

“This is wonderful news, but we’re not surprised to see Chelmsford feature so highly in these microbusiness rankings. Essex has a remarkable entrepreneurial spirit and this, combined with talented graduates and a fantastic business support network, makes it a great place to launch a start-up.

“As Anglia Ruskin University also has homes in Cambridge and Peterborough, we’re delighted to see these two cities also feature in the Business Financed list of top 20 locations for microbusinesses.”

Denise Rossiter, CEO, Essex Chambers of Commerce

“Essex Chambers are delighted to hear of Chelmsford’s ranking in the research findings. It’s great to see Chelmsford being recognised for its thriving micro-business community.”

Cheltenham (3rd)

Dr Polly Pick, Director of  Business Engagement and Partnership at University of Gloucestershire

“Gloucestershire as a county is very well networked, and a great place to do business. Cheltenham in particular is well positioned, with a thriving SME community, active networking groups and the University of Gloucestershire Park Campus. There are micro businesses in a wide range of sectors, but there is particular strength in Cyber and Digital, in part due to the proximity of GCHQ.”

Sarah Danson, Director of Strategic Growth at GFirst LEP and The Growth Hub

“As the Local Enterprise Partnership for Gloucestershire, at GFirst LEP we know Cheltenham is a great place to do business thanks to a wide variety of thriving sectors, supportive clusters and business support from Cheltenham’s Growth Hub. It’s great to hear that Cheltenham has been recognised nationally. At The Growth Hub we support hundreds of local businesses across Gloucestershire, and as Cheltenham is our newest Hub, we look forward to working with more Cheltenham-based businesses in the years to come.”

Chester (5th)

Councillor Richard Beacham, Cabinet Member for Inclusive Growth, Economy and Regeneration, Cheshire West and Chester Council 

“Chester is an exciting and growing city, with strengths in the Financial Services industry, Tourism and the creative and cultural sector. We are also benefiting from innovations in the green energy sector and our borough’s leading role in the Green Industrial Revolution. 

“We have identified the need for workspaces for start-ups, micro-businesses and small/medium-sized businesses and have launched a pilot aimed at providing a range of spaces in the city, with wrap around business support from the Council to help their ideas develop and growth. 

“This project is part of Chester’s One City Plan, which has an action to increase the number of people working in the city centre. 

“Starting out and growing a business on your own can be both an exciting and a daunting prospect. Our pilot project addresses some of those initial barriers; offering support and advice and helping to remove the isolation that can happen with home-based businesses.”

York (6th)

Councillor Ashley Mason, Executive Member for Economy and Strategic Planning

“It’s great to see York being recognised as one of the top ten locations for microbusinesses. We know what a vital role small businesses play in the economic life of our city. That is why we have worked hard in recent years to understand the needs of York’s microbusinesses and do what we can to help them thrive and overcome the ongoing economic challenges. York has long been renowned as a great place for small and micro business to flourish, and we’re very proud of the richness and diversity of our independent business community.”

Marc Fleetham, York St John University’s Director of Business Development & Knowledge Exchange

“York St John University Enterprise Centre is at the heart of York’s creative entrepreneurial spirit. It offers 6 months free business start-up accommodation in a dedicated incubator where newly formed businesses can access expert advice, guidance, and mentoring. Its success is down to its unique collaboration with other business support providers locally like The Growth Hub, City of York Council and York University, offering free access to all our combined resources and expertise.  York is walking the talk, and truly open for business.”

Laurence Beardmore, President of York & North Yorkshire Chamber of Commerce

“The Business Financed research confirms our experience on the ground in the region.

“York has seen a surge in micro-tech firms being founded. With two first class universities and a culture of entrepreneurial zeal running throughout the city, this is a brilliant place to start a business. 

“Given that York is such a wonderful city to live, I would imagine we have benefited from people relocating from elsewhere following the pandemic.

“It is also worth noting that, thanks to the Chamber and other bodies, there is first class support for business in York, creating a perfect environment in order to grow an enterprise.”

Edinburgh (7th)

Dr Claire Seaman, Professor Emerita of Family Business at Queen Margaret University

“Scotland’s capital city is a great place for micro-businesses, partly because there are many diverse communities. Micro-businesses are very well placed to develop niche markets for unusual products and a diverse range of customers offers real opportunities for that.  Of course, there are challenges – there are in any business environment – but finding a customer base is a first and essential step and that is where Edinburgh excels. 

“Edinburgh also has a very wide range of specialist support for micro-business from the university sector. This includes specialist support for start-ups and SMEs in the food and drink sector from the Scottish Centre for Food Development and Innovation at Queen Margaret University. In addition, support for the develop of family businesses has been crucial to the city, with bespoke business support emerging from a collaboration between Queen Margaret University and Family Business United Scotland. Most micro-businesses have some level of family involvement and managing the business, family dimensions and succession planning is crucial for the long-term success of the business and the economic health of the city.”

Dr John Lonsdale, Head of Enterprise at Edinburgh Innovations, the University of Edinburgh’s commercialisation service

“It’s fantastic to receive further recognition of Edinburgh as a brilliant place to start a business. University of Edinburgh students and staff formed 119 companies last year and attracted £107m of investment, with £30m going to student startups.

“At the University, we have worked hard to build an innovation pipeline that works with and adds to the wider Scottish entrepreneurial ecosystem. We have six Data-Driven Innovation hubs funded by the Edinburgh and South East Scotland City Region Deal; Edinburgh Innovations supports students and staff to start up and spin out and access competition funding; we have programmes for acceleration, incubation and venture building, and our in-house venture investment team, Old Capital Capital, provides crucial early-stage seed funding. 

“We have the ideas, and the pipeline to make them work for a better world.”

Peterborough (11th)

A Peterborough City Council spokesperson said: “Peterborough consistently ranks highly in terms of startup rates, proportion of small- and micro-businesses, and long-term survival rates for businesses. We have an incredibly entrepreneurial population, driven in no small part by the fact that we have been one of the fastest growing cities since the turn of the century. We attract people from all over the world. They come here because they want to create better lives for themselves and that often comes hand-in-hand with an entrepreneurial outlook. Coupled with fantastic support infrastructure, from our business centres to startup bootcamps, the right ingredients are here in Peterborough – and things are about to get even more exciting with the launch of our new Digital Incubator launching later this year.”  

The rankings in full – 68 towns and cities

RankLocation
1Bath & NES
2Chelmsford
3Cheltenham
4Exeter
5Chester
6York
7Edinburgh
8Maidstone
9Worcester
10Thanet
11Peterborough
12Brighton and Hove
13Basingstoke
14Eastbourne
15Lancaster
16Basildon
17Norwich
18Greater London
19Cambridge
20Warrington
21Bedford
22Belfast
23Northampton
24Slough
25Bristol
26Colchester
27Swindon
28Milton Keynes
29Gloucester
30Oxford
31Aberdeen
32Telford
33Plymouth
34Bournemouth & Poole
35Doncaster
36Chesterfield
37Wigan
38Cardiff
39Ipswich
40Derby
41Hastings
42Reading
43Lincoln
44Southend-on-Sea
45Coventry
46Sheffield
47Blackburn
48Leeds
49Birmingham
50Crawley
51Luton
52Nottingham
53Leicester
54Mansfield
55Kingston upon Hull
56Stoke-on-Trent
57Greater Manchester
58Barnsley
59Newcastle
60Glasgow
61Dundee
62Blackpool
63Swansea
64Preston
65Burnley
66Liverpool
67Sunderland
68Newport

The study data

For this study and data analysis, we used the following metrics:

  • Size of population (so that we could more fairly rank the other metrics)
  • Number of microbusinesses (this is a business employing no more than 4 people, but large enough to be registered for either VAT, PAYE, or both)
  • Percentage of the population that is self-employed
  • 5-year business survival rate
LocationPopulationMicrobusinessesMicrobusinesses per personSelf employed peopleSelf employed %Survival rate %
Aberdeen2081905,9350.02985004.0839.1
Barnsley2232815,2900.0243,3001.4837.6
Basildon1448595,8000.047,8005.3839.5
Basingstoke1076425,9700.0552,7002.5151
Bath & NES1934006,5950.034140007.2446.3
Bedford1069405,9150.0553,6003.3740.1
Belfast5958797,3600.012425007.1344.8
Birmingham114500028,9850.02550,2004.3826.3
Blackburn1465214,2750.0293,3002.2539
Blackpool2394092,9150.0127,2003.0138.8
Bournemouth46626612,1150.02616,2003.4739.9
Brighton and Hove47448512,1700.02628,2005.9443.6
Bristol61728014,0000.02332,8005.3140.5
Burnley1494221,9450.0133,3002.2138.5
Cambridge1584343,7100.0236,8004.2945.3
Cardiff4472879,2900.02122,0004.9239.2
Chelmsford1115116,5900.0597,3006.5543.6
Cheltenham1164473,9850.0349,3007.9942.5
Chester79,64510,6550.1345,3006.6540.7
Chesterfield1130572,3650.0212,7002.3944.8
Colchester1218595,7550.0473,0002.4642.2
Coventry3592628,1750.02319,6005.4636.3
Crawley1805082,7050.0154,8002.6641.8
Derby2704685,7350.02113,3004.9239.1
Doncaster1581417,7800.0497,4004.6830.7
Dundee1575502,4100.01539002.4838.1
Eastbourne1182192,4600.0218,8007.4442
Edinburgh48227013,4300.028358007.4242.3
Exeter1177633,2500.0289,9008.4144.6
Glasgow95762014,0550.015301003.1437.1
Gloucester1500532,8900.0197,9005.2640.9
Greater London9787426435,5600.045751,9007.6836.6
Greater Manchester255337982,8150.03236,5001.4331
Hastings1334222,2150.0179,0006.7538.9
Ipswich1788353,4900.025,5003.0843
Kingston upon Hull3140184,7700.01511,5003.6637.7
Lancaster144,2463,4900.0247,5005.244.1
Leeds792,52523,1900.02921,3002.6937.6
Leicester50891611,3900.02216,6003.2635.6
Lincoln1148791,9450.0177,5006.5338.2
Liverpool86412211,2050.01327,7003.2133.6
Luton2580186,8350.02610,5004.0712.3
Maidstone1076276,7200.0624,0003.7244.6
Mansfield1719582,3100.0133,6002.0940.5
Milton Keynes22994010,1200.0447,4003.2239.8
Newcastle823,0006,1400.00713,2001.640.9
Newport3068443,3000.0114,7001.5336
Northampton21596313,7200.06412,6005.8336.3
Norwich2131663,5700.01715,5007.2743.7
Nottingham7299777,1550.0121,1002.8940.2
Oxford1713803,5200.0216,8003.9742.2
Peterborough1633796,3900.03910,3006.339.9
Plymouth2602034,5850.01816,0006.1539.4
Preston3133224,3600.0146,2001.9838.8
Reading3180145,2900.01717,0005.3539.4
Sheffield68536812,4400.01828,3004.1339
Slough1637775,3600.03311,7007.1437.2
Southend-on-Sea2953105,7400.01912,8004.3339.2
Stoke-on-Trent3727754,8850.01314,2003.8138.4
Sunderland3354154,4350.0137,1002.1236.8
Swansea3003525,1500.0177,0002.3336.6
Swindon1856095,9250.0327,0003.7740.1
Telford1479804,1900.0285,2003.5139.7
Thanet1253703,4200.0271470011.7339.7
Warrington1654566,8550.0417,9004.7739.2
Wigan1754057,2050.0415,2002.9639.1
Worcester1016592,6150.0267,4007.2842.2
York1537175,2850.0347,6004.9447.9
UK microbusiness data

Study scores

RankLocationMicrobusinesses scoreSelf employed scoreSurvival rate scoreResults
1Bath & NES526066178
2Chelmsford655558178
3Cheltenham536655174
4Exeter436762172
5Chester685646170
6York544367164
7Edinburgh446354161
8Maidstone662961156
9Worcester396253154
10Thanet426837147
11Peterborough555338146
12Brighton and Hove385157146
13Basingstoke641468146
14Eastbourne286450142
15Lancaster364460140
16Basildon564835139
17Norwich186159138
18Greater London606511136
19Cambridge343665135
20Warrington584032130
21Bedford632542130
22Belfast55864127
23Northampton67509126
24Colchester611252125
25Slough515914124
26Bristol324645123
27Milton Keynes592338120
28Swindon493041120
29Gloucester234548116
30Aberdeen463429109
31Oxford263251109
32Telford452736108
33Plymouth215234107
34Bournemouth & Poole402639105
35Doncaster62393104
36Wigan571828103
37Chesterfield291163103
38Ipswich252056101
39Cardiff274231100
40Derby30412798
41Hastings16572497
42Reading17473397
43Lincoln19541992
44Southend-on-Sea24373091
45Coventry3349890
46Sheffield22352683
47Blackburn4792581
48Leeds48161680
49Birmingham3738277
50Crawley13154977
51Luton4133175
52Nottingham2174362
53Leicester3124661
54Mansfield1064460
55Kingston upon Hull14281759
56Stoke-on-Trent8312059
57Greater Manchester501455
58Barnsley3521552
59Newcastle144752
60Glasgow12211346
61Dundee15131846
62Blackpool4192346
63Swansea20101040
64Preston1152238
65Burnley782136
66Liverpool622533
67Sunderland971228
68Newport33713

Methodology

We obtained ONS data for each location:

  • Number of VAT- or PAYE-registered businesses with no more than 4 employees (what we decided to call a ‘microbusiness’ for the purposes of this research)
  • Number of self employed people
  • 5-year business survival rate
  • Size of population

For each location, we used the population data to calculate:

  • Percentage of population working for a microbusiness
  • Percentage of population which is self employed

Then we assigned each location a score from 1-68 for each of the metrics, added up the total score across the 3 metrics, and then ranked them in order from 1-68 for total score.

Sources

  • ons.gov.uk
  • nomisweb.co.uk

Correction

When this report was first published, an error was made. Data for the city of Bath, and data for the wider area of Bath & North East Somerset, were accidentally mixed.

The data has now been updated to use only Bath & NES data, but the overall rankings have not changed.

However, this #1 ranking now applies to Bath & NES, rather than the city of Bath alone.

The following corrections were made:

  • Population changed from 109,503 to 193,400
  • Number of self employed people changed from 7,800 to 14,000

Sources for this new data:

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Reviewed by , Managing Director

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