You’d be hard pressed to find a business leader willing to challenge the notion that London is the UK’s commercial powerhouse. The capital is the undisputed keystone of the country’s economy: it represents an estimated 17% of the UK’s overall economy and has an overall GDP of about £565bn – that of a small country. In 2016 it grew at double the rate of the rest of the country as a whole.
But London’s overwhelming economic dominance doesn’t stop it facing competition from the rest of the UK. And it certainly doesn’t mean businesses – particularly smaller businesses – can’t thrive outside of the M25.
Over the past few years, a collection of challenger cities have emerged, riding on a wave of technological advancement, to stake their claim for commercial success. The past year, especially, has seen cities across the UK prove themselves fertile ground for small and medium enterprises (SMEs) and so-called “small office/home office” (SOHO) businesses to thrive.
A recent survey, commissioned by Vodafone and conducted by Circle Research, interviewed 500 SME and SOHO business leaders about their experiences operating in regions with growing cities. Respondents hailed from cities such as Manchester, Leeds, Brighton and Cambridge (as well as London), and operated in a variety of sectors, including technology, construction and finance.
The business leaders were surveyed about every element of their organisations – growth, infrastructure, talent, quality of life, support from the government, and more. Regardless of sector and location, their message was clear: business is good.
“With access to top talent, lower overheads and a high quality of life, these cities are changing the game in the UK and democratising success across the country,” says Anne Sheehan, enterprise director at Vodafone UK. “The survey showed that many businesses were thriving – with confident leaders empowered by – and proud of – their location.”
According to the survey, the south-east, east and east Midlands and north-east and Yorkshire all outperformed London in terms of revenue, profitability and employee growth in the past year.
The north-west boasted particularly eye-catching figures, showing 20% more productivity than the previous year, despite having 20% fewer employees. No wonder 68% of business leaders would recommend it as an area for setting up a new business. It certainly helps that housing in the region is a lot more affordable for employees, while business owners can expect to find comparatively modest overheads and salary costs.
Elsewhere, in the east and east Midlands, 71% of those surveyed found it a good place to do business and 63% said it offers a highly attractive quality of life. While in Cambridge – the heart of the Silicon Fen – a perfect blend of talent, funding, quality of life and government support has seen it emerge as one of the key challenger cities. It helps that Cambridge houses offices for five of the most prestigious tech companies: Google, Facebook, Apple, Amazon and Microsoft.
It’s a similar story for the south-east, where 75% of SME leaders say there is a strong talent pool of skilled workers. That, coupled with a high quality of life, good schools and access to training, is why many business leaders (73%) view it as a great place to start a new venture. It’s certainly not hard to see how Brighton has been able to grow its Silicon Beach (a diverse concentration of creative and digital businesses), when you consider that 57% of the business leaders surveyed felt that overheads and salary costs are good in Brighton, compared to just 42% in London.
The extent to which technology in particular has levelled the playing field should not be underestimated. Business processes – from office meetings to processing payments – have been revolutionised by newer digital technology. Advancing tech has cut costs and improved productivity and revenue, while social media has provided new revenue streams. The bonus? Every business has been able to benefit, whatever its size, wherever it’s based.
Technology has helped companies improve their customer service too, enabling them to build loyal customers both locally and further afield. Social media and e-commerce have provided them with the platforms for ever-faster response times to customer queries, not to mention the ability to instantly sell products. The ability to better attain and process information has also meant it’s easier to listen to customers and better understand their needs, contributing to the success businesses are experiencing in challenger cities.
If this success is to continue, though, businesses will need all the support they can get from central and local government. Many of the business leaders surveyed believed the responsibility fell to these authorities to ensure that necessary infrastructure – such as improving 4G connections, or ensuring there’s a significant pool of highly skilled workers – is available for businesses to thrive.
There’s confidence this trend will continue, too. According to the survey, the business leaders surveyed presented a strong picture of growth across a variety of sectors: more than half of the construction companies had plans to invest (and probably in technology), while 53% of retail SMEs were planning on diversifying their products and services. Business leaders across all sectors anticipated growth in revenue and market share.
A rebalancing of the UK’s economy is still required – London remains the irresistible epicentre of British commerce – but in the short term, the platform is there for regional SMEs and SOHOs to thrive and keep the capital on its toes.
A version of this article originally appeared on Your Ready Business. Content on this page is paid for and produced by Vodafone, sponsors of the Business Made Simple hub on Guardian Small Business Network
