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Picture of James Howell the Compliance ManagerPosted by: James Howell on Dec 16, 2015 in Managing a Business

Where is the best place in the UK to start a business?

Quality Formations list the UK's top ten startup cities.

Quality Formations, a London-based company formation experts, has assessed all of the UK’s 69 cities in order to find the best places to start a new company. Here we list the UK’s top (and bottom) 10 business cities, and explain both how and why they’ve developed the country’s top up-and-coming startup scenes.

Starting a business in the UK isn’t always easy. Access to finance and quality of life play a huge role in the successful launch of it. Meanwhile, costly overheads have the ability to make or break even the most promising of startups. Consequently, commercial success largely depends upon a company’s geographical location. That’s why we set out to discover which of the UK’s 69 cities have the best climate in which to launch new startups.

In compiling this list, our company formation experts marked each UK city on eight criteria: commercial property, energy, virtual office services, public transport, broadband service, workforce demographics, access to finance and quality of life. Subcategories, such as broadband download speeds and the current availability of prime office space, were all scored out of ten in order to help us create an all-encompassing national league table (for full league table, click here).

By factoring in the living costs of bustling financial centres like London and Edinburgh, we ended up eliminating some of the UK’s most revered business hubs in search of the country’s next up-and-coming startup scene. We wanted to find the easiest place in the UK to start a company – and that’s exactly what we’ve done.

Where should I start my business?

Quality Formations: Derby is the UK's top startup city.

Derby is home to one of Europe’s biggest aerospace clusters. Photo: Chris J Dixon

Derby might not make international headlines as a business powerhouse – but it is by far the most affordable, accessible and supportive city in the UK to launch a new startup.

It may not be widely known, but Derby is actually the UK’s number one tech city – with 12% of its workforce employed in hi-tech industry. As a point of reference, that’s four times the national average, and double that of other hi-tech cities. A vast majority of those companies are transport-based.

Derby is home to one of Europe’s largest clusters of aerospace companies, with over 700 companies representing every aspect of the supply chain. The biggest of these firms, Rolls-Royce manufacturer OEM, employs 12,500 people. Derby also hosts the world’s largest cluster of specialised rail companies, the bulk of Toyota’s UK manufacturing operations and the only major manufacturer of rolling stock in the UK.

Despite Derby’s local economy being guided by some of the globe’s most well-established companies, the tech city also maintains an impressive support base for new startups that cannot be rivalled. A grassroots enterprise hub, extensive Creative Industries Network, and the UK’s biggest rail forum, provide all-encompassing mentoring programmes to foster fresh business ideas – and construction is nearing completion on a brand-new, 250-acre entrepreneurial park that will be able to create 8,000 jobs within a new, tax-friendly enterprise zone.

Above all else, Derby’s startup potential stands out in terms of the city’s affordable cost of living, cheap virtual office rates and sky-high wages.


Some of our other top ten cities surprised us for different reasons.

In terms of launching a new company, Coventry stole the number seven spot on our list due to the impressive entrepreneurial network it has in place to foster young talent. Both of its universities work closely with local business forums to secure real experience for its graduates, commercial property rates are low at just £16 per square foot, and virtual office services are well below the UK average. Despite boasting a slightly higher cost of living, it’s also worth pointing out that Coventry maintains a very low crime rate for a city its size.

Meanwhile, for a city of almost 500,000, Liverpool offers a disproportionately low cost of living that should definitely be attracting would-be startup founders. Prime commercial real estate costs just £18.50 per square foot, with rampant availability. Meanwhile, accommodation prices are among the UK’s lowest – with the average two-bedroom property coming in at just £495 per month. Crime is relatively low, and childcare is below the UK average, too.

For a complete analysis of our top ten cities in which to start a business, click here.

Or to see where your city fared across the entire UK, click here.

Where should I not start my business?

Quality Formations lists the UK's 10 worst startup cities.

Unfortunately, not every city can be a winner in terms of commercial potential. Some of the UK’s cities are simply too small, whilst others lack adequate technological infrastructure to support a new generation of up-and-coming companies. Worse yet, some cities simply maintain a sky-high cost of living that bootstrapping entrepreneurs cannot afford. So, which UK cities should aspiring business leaders avoid?

The bottom of the barrel

Quality Formations: Hereford is the UK's worst startup city.

Hereford suffers from a lack of commercial office space. Photo: Flickr

At the end of the day, one UK city has got to be named the country’s worst for starting a company. Thanks to a complete lack of business infrastructure, we’ve chosen Hereford as the absolute worst of the UK’s 69 cities in which to start a business.

In terms of commercial real estate, office space in Hereford is actually quite low at £12.10 per square foot; however, there just isn’t enough space to go around. Availability and selection are both poor. Moreover, virtual office prices are the UK’s most expensive after London and Edinburgh – yet without the benefit of choice and availability. Broadband speeds in the city are also slow at 9Mbps, and startups have limited access to region-specific grants.

Hereford isn’t alone. A vast majority of the UK’s small cathedral cities did not rank well as part of this study; however, there were a few surprises, too.

As the UK’s oil capital, many would expect Aberdeen to be one of the UK’s top destinations for new startups. But due to the city’s numerous industrial successes, the cost of starting and maintaining a company in Aberdeen has become simply untenable for many small business owners. That’s why it earned the number four spot on our list of places not to start a company in the UK – and is one of the worst in Scotland.

After London, Aberdeen offers the most expensive office space in the UK. It’s also the most expensive place to rent a two-bedroom home in Scotland, at an average £900 per month. Crime is relatively high in comparison to most Scottish cities, while the area’s average broadband speeds are surprisingly among the UK’s slowest.

Want to see a full analysis of our bottom 10 cities? Click here.

Or, to see how your city performed across all of the UK, click here.

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