The 10 UK areas where small businesses are most likely to thrive

Study reveals where in the UK small businesses were the most successful in 2023 – and it’s good news for businesses in West Wales

• SMEs are the most successful in Ceredigion, a new study has revealed.
• Selby and South Staffordshire ranked in second and third respectively. 
• Bromsgrove is the local authority where SMEs are struggling the most.

Ceredigion is the local authority in the UK where small to medium enterprises (SMEs) are thriving the most, a new study has found.

The research, conducted by Qardus, analysed data from the ONS to determine where SMEs are thriving and where they are in fact struggling. The analysis was based on six different factors, including the following: The Active Enterprise Change between 2021-2023, the change in the count of births of new enterprises 2020-2022, the change in the count of deaths of new enterprises 2020-2022, the change of high growth enterprises per 1,000, and the survival rate of SMEs across 3-5 years.

Taking these factors into consideration, a process called minimum to maximum normalization was used to convert metrics to a score between 0 and 10, where 0 is the worst score in the range and 10 is the best. Each metric had a weighting for how much it contributes to the final score, the score was then scaled to a maximum of 100 using the weightings provided. Local authorities were then ranked based on their overall score out of 100 with the lower the score, the more successful the area is deemed.

The UK areas where small businesses are the most successful

Ceredigion is the local authority where SMEs are thriving the most. The area in Wales recorded a score of 29.03 out of 100. Both their three and five-year survival rates were recorded at 67.44% and 55.81% respectively, higher than the average UK rate. There was also an 18.42% growth in SMEs between 2020 and 2022.

Selby ranked second for where small and medium businesses are the most successful with a score of 29.15 out of 100. The North Yorkshire town scored particularly high when it came to the three year survival rate of small businesses in the area with almost three quarters (72.57%) of SMEs passing the three-year mark.

South Staffordshire ranked third with a score of 29.31 out of 100. Small businesses in the area grew by a third (32.94%) between 2020 and 2022 whilst the survival rates of small businesses also ranked highly with 65.38% of businesses surviving over three years.

South Hams ranked just below South Staffordshire in fourth with a score of 29.74 out of 100. Based in the south of Devon, the area sees 68.24% of small to medium businesses surviving over three years as we all as a growth of 5.31 businesses registering per 1,000 in the area.

South Derbyshire ranked fifth for where SMEs are thriving the most in the UK. The borough recorded a high score of 29.95 out 100. When broken down into the factors analysed, South Derbyshire saw a growth of 12.91% in businesses between 2021 and 2023 as well as 20.27% of small to medium businesses in the area growing substantially in size.

The UK areas where small businesses are struggling the most

Bromsgrove is the local authority where SMEs are struggling the most with a score of 80.75 out of 100. Bromsgrove recorded a -30.22% drop in SME enterprises being registered between 2021 and 2023 – the biggest drop of any local authority. There was a 5.81% survival rate of SME’s in Bromsgrove recorded in the last five years too, contributing to Bromsgrove’s ranking in the study.

Rochdale ranked second for where SMEs are struggling the most with a score of 69.75 out of 100. The Greater Manchester town scored particularly low when it came to the growth of existing SME’s in the area, with just 1.91 SME’s per 1,000 growing.

Worcestershire ranked third with a score of 66.12 out of 100. There was a 26.58% decrease in registered SME’s in the area between 2020 and 2022, as well as just under a fifth of SME’s surviving for more than five years in Worcestershire.

Bury ranked just below Worcestershire in fourth with a score of 64.56 out of 100. The Greater Manchester borough has an alarming five-year survival rate at 14.52%, contributing to its low overall ranking.

Rossendale ranked fifth for where SMEs are struggling the most in the UK. The Lancashire borough recorded a low score of 64.37 out 100. When broken down into the factors analysed, between 2021 and 2023, there was a decrease of 6.3% in registered businesses in the area, likely due to the high business ‘death rate’ of 70.21%, wherein just over seven in ten SME’s in Rossendale have ceased operating between 2020 and 2022.

Leicester ranked sixth with a score of 63.89 out of 100. The local authority saw a reduction in SME’s being registered between 2021 and 2023, with the rate of business registered reduced by 15.31%. Similarly, just over a third of SME’s in Leicester (34.38%) have survived in the last five years.

Cheshire East ranked seventh with a score of 62.92 out of 100. The Cheshire borough recorded a 3.41% drop in businesses being registered between 2022 and 2020. Meanwhile, Somerset West and Taunton (62.25 out of 100), Rhondda Cynon Taf (62.20 out of 100) and Buckinghamshire (61.22 out of 100) rounded off the 10 local authorities in the UK where SMEs are struggling the most.

Hassan Daher, the founder of Qardus, commented the following: “The findings of this study ultimately indicates that some local authorities are better equipped to host new SMEs than others. What is interesting to note is that no London based local authority ranked in the top ten, suggesting that it is difficult for SMEs to start out successfully in the capital.”