What are the best UK cities for independent businesses?

byLes Roberts on December 16th 2021

There has been a massive growth in small businesses across the UK over the past five years. In fact, more than 800,000 new business registrations have been made since 2018/19. This represents an impressive 3.5% increase in growth, but things slowed down when the pandemic kicked off and lockdowns began at the start of 2020.

COVID-19 had a huge effect on small businesses, causing thousands in the UK to close. Despite the UK embracing the ‘new normal’ and staycation bookings skyrocketing, businesses can't always rely on tourists and residents from neighbouring cities to shop locally.

An independent coffee shop owner wearing glasses and a beanie hat smiles while serving a customer

To help small business owners work out where to set up shop, we've created an index using nine different metrics to discover where in the UK is most fruitful for independent businesses. 

The results also reveal where in the UK is the best city for budding business owners to start and run their own local independent venture, and how you can continue to support them.

The top UK towns and cities for independent businesses 

The index analysed 50 of the largest cities in the UK using nine different metrics to assess how strong each cities 'Indie Economy' is. The result revealed that Southampton is the best UK city for independent businesses.

The cities were each assigned an index score out of 100 based on a combination of the below data points from ONS and Centre for Cities:

  • Business start-ups per 10,000 population in 2019
  • Five-year survival rate 
  • Births of new businesses as a proportion of total active businesses (2019)
  • Deaths on new business as a proportion of total active businesses (2019)
  • % of small active businesses
  • Active businesses 10,000 population (business density)
  • Commuting on foot (%)
  • Unemployment claimant count rate November 2020 (%)
  • Rateable value per m2 of floor space

Southampton ranked the highest with an index score of 74 out of a possible 100, along with York in second place with a score of 70  and Bristol in third with a score of 66 respectively. 

Continue reading to see where your city ranked!

Blue bar chart showing how the UK's 10 best towns and cities rank in order

Southampton is the best city for independent businesses in the UK 

The index found that Southampton is the best city for independent businesses with a score of 74 out of 100 - the perfect location for would-be business owners. 

A street in Southampton with a sign saying Gerorge's restaurant

The data revealed that Southampton has a whopping 91.98% active small businesses in the UK, putting it just behind the UK's capital, London. Southampton also featured among the UK cities with the highest number of business start-ups per capita, with 79 of them for every 10,000 people.

Starting a new business is certainly at the forefront of people's minds in Southampton. Since 2019 small businesses have been popping up all over Southampton, such as Porter's Wine and Charcuterie, a wine bar situated on Queen’s Terrace. Google search volume data also found there has been a whopping 100% search increase in the last 12 months for people searching ‘small businesses in Southampton’.

For those googling how to start a business, there are a number of grants available from the government that can help people start their own businesses. For example, The Bounce Back Loan Scheme (BBLS) enables smaller businesses to access finance more quickly to help with recovery from the coronavirus outbreak.

York takes the second spot with the highest business survival rate

York came in second place with a score of 70 out of a possible 100. The historic city also had the highest business survival rate out of all UK cities analysed - a great city for your small business to flourish. 

A street in York with an old bridge over the road flanked by green embankments. York Minster catherdral is in the background.

The data showed that York had an incredible 505 active businesses per 10,000 population and the highest number of people commuting by foot at 17.68%. 

A great place for independent business and being able to walk to work, York was one of the UK cities with the cheapest value for office floor space. To rent a space in York would cost hopeful business owners £98 per m2 - enticing for anyone after space on a budget. For those with money worries, there are a number of grants from local councils in York when starting your business. For example, the Restart grant helps towards payments for non-essential retail businesses during the coronavirus outbreak - helping independent businesses across York. 

York is home to some amazing independent businesses. The Little Yorkshire Candle Company is a great example, founded in 2016.  Other independent businesses in York with a great survival rate include, ‘Bare’ a baby clothing shop and ‘Alligator’ York’s premier organic food supplier. 

Bristol rounds off the top 3 for the best UK cities for independent business 

The study found that Bristol is the third best city for independent businesses with a score of 66 out of 100. 

Clifton Suspension Bridge over the River Avon with Bristol in the background

Bristol had 21,200 active businesses in the UK from 2019 and 2,895 new businesses starting from 2019. Google search volume demand also indicated that people were searching for ‘small businesses in Bristol’ with a massive 40% increase in the last 12 months. 

Small businesses are all over Bristol, with delis such as ‘vegan deli cafe’  ‘Flip’, and a wide range of boutique retail businesses like, ‘Fox + Feather’, ‘Rhubarb Jumble’ and ‘The Ottowin Shop’. 

Financial support is essential for your independent business and there are a number of grants available in Bristol to help kickstart your business. 

For example, ‘Fredericks Foundation’ runs a microloan fund for people who are starting businesses and ‘British Business Bank’ works with over 80 financial partners to unlock financial support for small businesses - giving that extra helping hand to start your business.

Which are the top UK towns and cities for independent businesses?

Here are what we found to be the top UK towns and cities for independent businesses, based upon the following nine categories of business-related factors:

  1. Number - Number of start-ups per 10,000 population
  2. Survive - 5-year business survival rate
  3. Startup - % of new businesses started
  4. Closed - % of business closures
  5. Active-  % of active SMEs
  6. Density - Business density*
  7. Walk - % of the population commuting by foot
  8. Unemploy - % of unemployed benefit claims
  9. Cost - Cost of office space (per m2)

The total index score is then given out of 100.

#UK CityNumberSurviveStartupClosed Active Density WalkUnemployCost Total index score
1Southampton78.642.0%21.4%10.1%92.0%37212.6%6.0%£114.0074.4
2York45.147.7%12.2%9.8%88.5%50517.7%3.5%£98.0070.0
3Bristol55.942.8%13.7%11.2%89.3%34314.2%5.4%£100.0065.6
4Northampton8933.3%17.9%11.4%90.9%51710.4%7.1%£70.0063.8
5Swindon5044.4%13.2%11.0%91.2%4549.5%5.7%£100.0063.6
6Reading66.246.1%13.9%11.3%90.5%26010.9%4.9%£114.0063.3
7Bournemouth5345.7%12.1%10.8%90.1%10589.5%6.2%£100.0063.1
8Cambridge54.944.8%12.2%10.5%87.7%35514.6%4.1%£113.0061.6
9Leeds52.642.9%12.2%10.8%89.3%75011.3%6.9%£98.0061.1
10Edinburgh5542.1%12.9%11.4%89.0%48116.3%5.0%£124.6758.9
11Leicester58.939.8%15.8%11.5%88.0%27912.9%6.5%£70.0058.2
12Portsmouth49.941.0%17.2%11.4%90.2%38210.9%5.9%£114.0058.2
13Peterborough67.240.9%16.3%11.0%90.9%5118.5%7.6%£113.0057.1
14Slough79.643.5%15.8%11.6%91.3%4619.2%8.6%£114.0056.4
15Coventry43.644.6%13.8%12.0%91.0%32710.9%6.7%£102.0055.6
16Luton68.338.2%16.9%12.1%92.9%33412.6%8.6%£113.0054.2
17Bradford42.742.3%12.8%10.4%89.9%60310.6%9.4%£98.0054.0
18Wigan41.241.8%13.4%10.8%90.2%5768.9%6.8%£98.0053.8
19Doncaster58.234.2%17.2%12.5%91.2%6699.1%7.3%£98.0053.1
20Warrington55.941.6%10.6%13.5%91.4%6697.0%5.1%£98.0052.7

Derby, Mansfield and Leicester have the best value for office floor space

Small businesses often have limited financial resources when starting out, which can restrict the size of the shop or office space they can rent. 

A group of workers at a a tech start up gather around a laptop in their office. Shelves full of books and folders sit in the background.

According to the data, the cheapest UK cities with the best value for office floor space are Leicester, Derby and Mansfield all at £70 per m2. Mansfield covers a broad range of industries, from small collectable businesses, such as antique stores, to big piano shops - with office floor space meeting all budget needs.

Leicester was the last region among the top three with the best value office floor space, having 1,695 active businesses with over ten employees (2019), proving to be a great city as well as being cost-effective.

London, at £280 per m2, is at the pricer end of the office floorspace scale. It ranks alongside Edinburgh and Cardiff - both at £124.77 per m2 - as the most expensive UK cities per m2. 

The UK towns and cities with the biggest growth in new businesses in the past five years

There’s been an increase in small businesses opening right across the UK. York, where businesses have a huge survival rate of 47.7%,  has the highest growth within the past five years. Businesses like The Little Green Weigh, a small independent zero waste shop in York, support this trend. 

A fruit and veg stall with a colourful range of fruit and vegetables

Reading and Bournemouth rank just behind as the next UK cities with the biggest growth in the past five years - with great survival rates of 46.1% and 45.7%, respectively. 

‘Loddon Brewery’, a small family-run business in Reading, opened in 2003, selling bitters and ales is still going strong, paying tribute to York’s small business survival rate - proving this town certainly earns a place in the top three. 

Bournemouth, also ranking in the top three for the biggest growth in new business, is home to some great independent businesses. ‘Studio Zipcode’, a clothing store, was founded during the first national lockdown by fashion student Emma Coleman - a great town to get your business started and shows how Bournemouth ranked in the top three for the biggest growth in new businesses in the past five years!  

Methodology

This index looks at the 50 largest cities in the UK (where data was available*). The index is made up of 9 different metrics that cover aspects of an 'Indie Economy'. The metrics analysed were: 

  • Business start-ups per 10,000 population 2019
  • Five-year survival rate 
  • Births of new businesses as a proportion of total active businesses (2019)
  • Deaths on new business as a proportion of total active businesses (2019
  • % of small active businesses 
  • Active businesses 10,000 population (business density) 
  • Commuting on foot (%) 
  • Unemployment claimant count rate November 2020 (%) 
  • Rateable value per m2 of floor space 

These metrics were then indexed with a score between 1 and 50, 50 being given to the city with the best score for each metric. These index scores were then added together to give a total index and therefore indicate which city is the best for the UK Indie Economy.