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

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.

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.

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

• Infographic
• What is a microbusiness?
• Notable findings
• Top 30 UK locations for microbusinesses
• Community response
• The rankings in full – 68 towns and cities
• The study data
• Study scores
• Methodology
• Sources
• Correction

Results snapshot – Top 10 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

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

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

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

Location	Population	Microbusinesses	Microbusinesses per person	Self employed people	Self employed %	Survival rate %
Aberdeen	208190	5,935	0.029	8500	4.08	39.1
Barnsley	223281	5,290	0.024	3,300	1.48	37.6
Basildon	144859	5,800	0.04	7,800	5.38	39.5
Basingstoke	107642	5,970	0.055	2,700	2.51	51
Bath & NES	193400	6,595	0.034	14000	7.24	46.3
Bedford	106940	5,915	0.055	3,600	3.37	40.1
Belfast	595879	7,360	0.012	42500	7.13	44.8
Birmingham	1145000	28,985	0.025	50,200	4.38	26.3
Blackburn	146521	4,275	0.029	3,300	2.25	39
Blackpool	239409	2,915	0.012	7,200	3.01	38.8
Bournemouth	466266	12,115	0.026	16,200	3.47	39.9
Brighton and Hove	474485	12,170	0.026	28,200	5.94	43.6
Bristol	617280	14,000	0.023	32,800	5.31	40.5
Burnley	149422	1,945	0.013	3,300	2.21	38.5
Cambridge	158434	3,710	0.023	6,800	4.29	45.3
Cardiff	447287	9,290	0.021	22,000	4.92	39.2
Chelmsford	111511	6,590	0.059	7,300	6.55	43.6
Cheltenham	116447	3,985	0.034	9,300	7.99	42.5
Chester	79,645	10,655	0.134	5,300	6.65	40.7
Chesterfield	113057	2,365	0.021	2,700	2.39	44.8
Colchester	121859	5,755	0.047	3,000	2.46	42.2
Coventry	359262	8,175	0.023	19,600	5.46	36.3
Crawley	180508	2,705	0.015	4,800	2.66	41.8
Derby	270468	5,735	0.021	13,300	4.92	39.1
Doncaster	158141	7,780	0.049	7,400	4.68	30.7
Dundee	157550	2,410	0.015	3900	2.48	38.1
Eastbourne	118219	2,460	0.021	8,800	7.44	42
Edinburgh	482270	13,430	0.028	35800	7.42	42.3
Exeter	117763	3,250	0.028	9,900	8.41	44.6
Glasgow	957620	14,055	0.015	30100	3.14	37.1
Gloucester	150053	2,890	0.019	7,900	5.26	40.9
Greater London	9787426	435,560	0.045	751,900	7.68	36.6
Greater Manchester	2553379	82,815	0.032	36,500	1.43	31
Hastings	133422	2,215	0.017	9,000	6.75	38.9
Ipswich	178835	3,490	0.02	5,500	3.08	43
Kingston upon Hull	314018	4,770	0.015	11,500	3.66	37.7
Lancaster	144,246	3,490	0.024	7,500	5.2	44.1
Leeds	792,525	23,190	0.029	21,300	2.69	37.6
Leicester	508916	11,390	0.022	16,600	3.26	35.6
Lincoln	114879	1,945	0.017	7,500	6.53	38.2
Liverpool	864122	11,205	0.013	27,700	3.21	33.6
Luton	258018	6,835	0.026	10,500	4.07	12.3
Maidstone	107627	6,720	0.062	4,000	3.72	44.6
Mansfield	171958	2,310	0.013	3,600	2.09	40.5
Milton Keynes	229940	10,120	0.044	7,400	3.22	39.8
Newcastle	823,000	6,140	0.007	13,200	1.6	40.9
Newport	306844	3,300	0.011	4,700	1.53	36
Northampton	215963	13,720	0.064	12,600	5.83	36.3
Norwich	213166	3,570	0.017	15,500	7.27	43.7
Nottingham	729977	7,155	0.01	21,100	2.89	40.2
Oxford	171380	3,520	0.021	6,800	3.97	42.2
Peterborough	163379	6,390	0.039	10,300	6.3	39.9
Plymouth	260203	4,585	0.018	16,000	6.15	39.4
Preston	313322	4,360	0.014	6,200	1.98	38.8
Reading	318014	5,290	0.017	17,000	5.35	39.4
Sheffield	685368	12,440	0.018	28,300	4.13	39
Slough	163777	5,360	0.033	11,700	7.14	37.2
Southend-on-Sea	295310	5,740	0.019	12,800	4.33	39.2
Stoke-on-Trent	372775	4,885	0.013	14,200	3.81	38.4
Sunderland	335415	4,435	0.013	7,100	2.12	36.8
Swansea	300352	5,150	0.017	7,000	2.33	36.6
Swindon	185609	5,925	0.032	7,000	3.77	40.1
Telford	147980	4,190	0.028	5,200	3.51	39.7
Thanet	125370	3,420	0.027	14700	11.73	39.7
Warrington	165456	6,855	0.041	7,900	4.77	39.2
Wigan	175405	7,205	0.041	5,200	2.96	39.1
Worcester	101659	2,615	0.026	7,400	7.28	42.2
York	153717	5,285	0.034	7,600	4.94	47.9

Study scores

Rank	Location	Microbusinesses score	Self employed score	Survival rate score	Results
1	Bath & NES	52	60	66	178
2	Chelmsford	65	55	58	178
3	Cheltenham	53	66	55	174
4	Exeter	43	67	62	172
5	Chester	68	56	46	170
6	York	54	43	67	164
7	Edinburgh	44	63	54	161
8	Maidstone	66	29	61	156
9	Worcester	39	62	53	154
10	Thanet	42	68	37	147
11	Peterborough	55	53	38	146
12	Brighton and Hove	38	51	57	146
13	Basingstoke	64	14	68	146
14	Eastbourne	28	64	50	142
15	Lancaster	36	44	60	140
16	Basildon	56	48	35	139
17	Norwich	18	61	59	138
18	Greater London	60	65	11	136
19	Cambridge	34	36	65	135
20	Warrington	58	40	32	130
21	Bedford	63	25	42	130
22	Belfast	5	58	64	127
23	Northampton	67	50	9	126
24	Colchester	61	12	52	125
25	Slough	51	59	14	124
26	Bristol	32	46	45	123
27	Milton Keynes	59	23	38	120
28	Swindon	49	30	41	120
29	Gloucester	23	45	48	116
30	Aberdeen	46	34	29	109
31	Oxford	26	32	51	109
32	Telford	45	27	36	108
33	Plymouth	21	52	34	107
34	Bournemouth & Poole	40	26	39	105
35	Doncaster	62	39	3	104
36	Wigan	57	18	28	103
37	Chesterfield	29	11	63	103
38	Ipswich	25	20	56	101
39	Cardiff	27	42	31	100
40	Derby	30	41	27	98
41	Hastings	16	57	24	97
42	Reading	17	47	33	97
43	Lincoln	19	54	19	92
44	Southend-on-Sea	24	37	30	91
45	Coventry	33	49	8	90
46	Sheffield	22	35	26	83
47	Blackburn	47	9	25	81
48	Leeds	48	16	16	80
49	Birmingham	37	38	2	77
50	Crawley	13	15	49	77
51	Luton	41	33	1	75
52	Nottingham	2	17	43	62
53	Leicester	31	24	6	61
54	Mansfield	10	6	44	60
55	Kingston upon Hull	14	28	17	59
56	Stoke-on-Trent	8	31	20	59
57	Greater Manchester	50	1	4	55
58	Barnsley	35	2	15	52
59	Newcastle	1	4	47	52
60	Glasgow	12	21	13	46
61	Dundee	15	13	18	46
62	Blackpool	4	19	23	46
63	Swansea	20	10	10	40
64	Preston	11	5	22	38
65	Burnley	7	8	21	36
66	Liverpool	6	22	5	33
67	Sunderland	9	7	12	28
68	Newport	3	3	7	13

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:

• https://www.nomisweb.co.uk/reports/lmp/la/1946157346/report.aspx
• https://www.ons.gov.uk/visualisations/censuspopulationchange/E06000022/