The success of a small business is by no means a given. There are many factors that contribute to their success or failure. It could be the size of market opportunity, differentiation, personality of the business management or something else, but access to talent and access to finance are becoming increasingly important.
Location is part of this, and despite the business opportunities it undoubtedly offers, London isn’t necessarily the best place to find success if you’re a small business. Recent research by card payment solutions provider Paymentsense identified Sheffield as the best place in the UK to start a small business.
With a rich industrial heritage, the South Yorkshire city still develops advanced manufacturing technologies through its two universities and other research organisations. It also has a significant public-sector presence and is a major centre for sport.
The factors Paymentsense took into account in ranking the locations included the five-year survival rate for start-ups, the number of people in employment, average weekly pay and weekly cash flow.
In Sheffield, the five-year start-up survival rate is 44.9 per cent. This is compared to London’s 39.3 per cent, which places the capital fifteenth. The only city to come close to Sheffield’s survival rate is fifth-placed Bristol, with a rate of 44.8 per cent.
Of the 685,368 people who live in Sheffield, 227,822 are employed. And cash flow is healthy, with £123.5 million available each week for small businesses. While much lower than the £2.7 billion available in London, this amount is higher than for other UK cities of a comparable size.
The other major factor when it comes to location is whether it is an attractive place for skilled employees to base themselves. In Sheffield, the average weekly pay for full-time workers is £542.10 while the average monthly cost of renting a one-bed city centre apartment comes in at £585. The rental figure for London is almost three times that, at over £1,700.
This shows that when it comes to the factors that really count for small businesses – access to talent and finance – a wide range of cities can provide what’s needed to succeed.
Taking this further, today’s communication and collaboration technology mean that, for many small businesses, being based in a city no longer brings the advantages it once did. While cities – particularly those with good universities – are undoubtedly magnets for talent, the costs of living and operating a business premises can present challenges.
Indeed, the need for businesses to be based in a single office is no longer as important as it once was, as talent and finance can increasingly be accessed regardless of location.
Many small and micro-businesses are able to operate extremely effectively with a distributed team that is spread across the world. They can work in a flexible and cost-effective way, while still providing the productivity and quality of service that customers, whether businesses or consumers, now demand.
This flexibility of location also extends to finance, with virtual bank accounts now offering small businesses a host of benefits over traditional banking. With digital payments the foundation of virtual banking, the increasing array of alternative finance options are all open to small businesses that shift to this approach to finances.
With just an internet connection needed to access and manage finances, as well as access to the talent and funding they need, small businesses can operate in a way that gets the most out of staff and enables them to take the opportunities that come their way.
This isn’t to say that location isn’t a factor – some types of businesses, such as an ice-cream shop, still require an ideal physical location to appeal to customers. But the ingredients for small businesses to succeed are increasingly at many small businesses’ fingertips. As a result, success is now more dependent on innovation and talent than ever before.