Our recent SMEs Like Me report revealed that, according to the latest government figures, there is a much larger representation of SMEs in London than anywhere else in the country – with 39% of all SMEs being based within the English capital. To put this into perspective, the South-East has the second largest representation of SMEs with 14%. While we know London does have a higher population that other areas across the country, what are the other reasons that so many more SMEs are based here rather than anywhere else?
This was part of the discussions held in our latest Disruptive Minds webinar, hosted in partnership with the Great British Entrepreneur Awards. We looked at the overrepresentation of SMEs in London, exploring why it is so high in this area and what can be done to create more opportunities and encouragement for businesses in other parts of the country.
Starting our discussions, 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.”
Christopher Kenna, CEO and Co-Founder of Brand Advance, has offices across the UK and Europe, so was well placed to talk to us about how other areas away from London are a great place to start up a business. In particular, he told us about his experiences with Manchester.
“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 every day 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.
Agreeing with this sentiment was Alison Edgar MBE. She said “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 does a region need to make it appeal when starting a new business? 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.”
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.”
Our taskforce reinforced that there is huge potential for SMEs to thrive in the small business scene away from London, however it is resourced and support that need to be put in place to ensure this can happen. Funding from the Government is a common theme when discussing why London attracts so many businesses, seeming to be supported much more than other areas, so it’s vital that more is done for SMEs in smaller regions.
Hear the full conversation and find out more on what can be done to encourage more SMEs in other regions by watching the full webinar here.
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