New business is booming in Britain

A new business boom is taking place right across Britain.

Last year in the UK 586,784 new businesses were registered with Companies House taking the total number to a record high of 3,513,186.

And according to figures, compiled by Inform Direct, which provides online company secretarial services, private limited companies made up over 95% of all formations.

London remains by far the most prolific area for start-ups with 191,915 new companies started in 2014.

Greater Manchester and the West Midlands have also seen success with 25,381 and 25,059 new companies established respectively.

Other areas in the top 10 included West Yorkshire with 15,924 formations, Essex with 15,815, Hampshire with 13,840, Hertfordshire with 13,336 and Kent with 13,223.

In Scotland, Edinburgh led the way with 6,161 new companies followed by Glasgow with 5,748.

Cardiff saw 3,077 new businesses being formed in 2014.

Henry Catchpole, CEO, Inform Direct, said: “It is great to see an entrepreneurial spirit flourishing right across the country.”

However, Henry also suggested that just using the number of companies formed as a proxy for entrepreneurialism is too simplistic and urged people to look beyond the headline figures.

Henry said: “While London will always get top billing, there are other supporting stars when you adjust for local population. Bristol, for example, saw an impressive 12 new companies for every 1,000 people in 2014.”

While Britain has long been famed as an enterprising nation, the recent explosion in start-up activity has been exceptional.

Henry suggests that there are three complementary factors fueling this growth.

First, there is the ease and speed with which a company can be started – usually within hours and generally for less than £20.

Secondly, many companies can successfully operate from home and need little more than a website before they can start trading.

Thirdly, there are improved channels for accessing capital. For example, crowdfunding has made it easier for new companies to get early stage backing.

In bringing together data available from Companies House and the Office of National Statistics, Inform Direct has built up a truly unique picture of how many businesses are now operating across the UK.

But alongside the success stories, there are warnings too.

In the last year 368,012 businesses were dissolved, and the number of companies surviving more than a few years remains low.

Of companies formed in 2010, only just over 50% are still in business today.

Henry said: “Despite the good news about new companies, we have to ask ourselves why so few businesses survive.

“With marked differences between neighbouring regions on the longevity of the companies being formed, areas wanting to foster more stable, long-standing businesses should ask themselves what they could do to aid new and existing companies.”