Finance · 11 August 2016

Which UK city is most cost-effective for startups?

Newcastle is the most cost-effective UK city for entrepreneurs starting new businesses
Newcastle is the most cost effective location in the UK to start a new business, with startup founders there borrowing just 17, 008 on average to get their venture off the ground.

Manchester, on the other hand, has been found to be Britain’s most expensive location to start out, with borrowing costs for new business owners averaging 44, 733.

The beneficial startup environment in Newcastle was revealed in new research conducted by LDF. Surveying 850 small business owners, the lender also discovered the average amount needed to start a business in the UK in 2016 was 27, 520.

Southampton, Liverpool, Cardiff and Leeds also ranked highly among the list of UK cities offering a cost-effective business environment to entrepreneurs, whereas Glasgow, Norwich and Brighton joined Manchester as some of the costliest startup locations.

Startup borrowing costs in London averaged at 28, 742, making the UK capital slightly more expensive for entrepreneurs than Scotland’s capital Edinburgh, where starting a business cost an average of 22, 990, or the Northern Irish capital Belfast, where the average was 23, 164.

With access to finance still considered one of the biggest challenges faced by entrepreneurs in Britain, the survey also identified the industries which required the most capital to start a business, and which needed the least.

The leisure industry proved most expensive, with leisure startup founders reportedly borrowing initial funds of 79, 137 on average. Motoring and manufacturing were also found to be costly industries, while catering business owners needed to borrow 43, 608 up front on average.

Entrepreneurs looking to save cash could launch a design business the average startup cost of a design firm was found to be just 4, 425. Marketing and communication, healthcare and finance were also found to be industries in which startups required minimal initial funding.

Regardless of location, accessing traditional sources of finance in Britain is becoming increasingly difficult, especially for small businesses.



Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.