Startup Nation: Entrepreneurship in the UK

At BusinessComparison, we are always interested in the latest facts and figures about businesses in the UK. In this report on the state of the country’s startups, we analysed data from Companies House to investigate the average age of businesses, as well as how this varies by region and by industry. We also looked into the number of dissolved businesses to determine how many startups and young companies had closed over the last year.

As of 1st January 2023, there were 5,578,752 companies active, 563,847 more than had been active the same time the previous year. This data demonstrates a year-on-year growth in the number of businesses and suggests that over 2022, a high number of entrepreneurs have registered companies. Although 11.7% of all businesses had dissolved by the year’s end, that’s not the highest percentage we’ve seen. 2021, 2019, 2018 and 2016 all had a higher percentage of businesses dissolved that year.

Industries with the Youngest Active Businesses

While some of the industries with the youngest average businesses are in the B2B category, such as employment activities and public administration, the other industries include businesses that could be either B2B or B2C. For example, the repair of computers and other goods is a service that would be valuable to either individual households or to other businesses - particularly SMEs who might not have their own IT department.

While often perceived as being home to B2C businesses, it’s worth bearing in mind that plenty of food and beverage services operate in the B2B space, such as catering companies whose clients include conference organisers.

The Youngest Active Businesses in the Country

London is by far the region where businesses have the lowest average age, 10 months younger than runner up the North East. The gap between the average age of firms between the North East, the North West, Wales and the West Midlands is in contrast only 4 months across all of them.

Delving deeper, we also have the data on which local authorities have the youngest businesses on average.

The five local authorities where businesses have the lowest average age are all in London. Famously a hub of entrepreneurship, it is unsurprising to see new startups bringing down the average age of businesses here. On average, companies in these local authorities are younger by several years than in the region of London overall.

Startup Dissolutions

The average age of dissolved businesses dropped in 2023 to 4 years and 4 months. In 2022, it was 5 years and 2 months. A higher proportion of businesses are closing before they reach 5 years old, which could suggest that recent years have been tough for starting a business. The median age of dissolved businesses in 2023 was 2 years old.

The regions with the youngest dissolved companies differed from those with the youngest average age of businesses. However, several of the regions appear in both lists.

As you can see, London is also the region with the youngest dissolved companies, which speaks to the difficulty of building a startup here. While many companies are founded in the city, the average age of London-based businesses that dissolved in 2023 was only 3 and a half years.

While Scotland and the East of England do not appear on the list with the youngest businesses, they do appear on the following ranking of regions where dissolved companies are youngest.

The industries with the lowest average age of companies were also not exactly the same as the industries with the youngest active companies.

Companies that provide computer repair services and companies in the public administration sphere appear in both lists. However, the remaining business types are all unique. This data suggests that these are the industries in which new startups have faced the most challenges in recent years, and they might be the hardest to build a new startup in.

Tobacco laws have become more stringent, with further restrictions set to limit smoking and vaping in the UK, so it is not surprising to see this industry featured here.

The number of new companies registering within the residential care activities sector may have increased during COVID-19. However, many are no longer viable as the pandemic threat has lessened.

While the average age of dissolved businesses has lowered, suggesting a difficult economic environment for startups, the number of registered companies increased significantly between 2022 and 2023. This research shows that there are a huge number of new startups in the UK across a wide range of industries. While many of them are in London, entrepreneurs and new businesses are thriving across the country.

New businesses are often in particular need of financial support. Our business finance options can help you secure a loan, whether you’re looking to take your SME to the next level or seeking investment to get a new startup off the ground.

Methodology

Company data was obtained from the Companies House advanced company search feature and the API.

The number of dissolved companies corresponds to the number of companies officially listed as dissolved in a given year, UK region, local authority, or industry (as per the current Standard Industrial Classification). Company age was computed as the amount of time from the date the company was incorporated to the date of its dissolution, as noted in the Companies House records, rounded to years and months. Mean and median average age estimates were taken for dissolved companies across years, industries, and locations. The percent of active companies dissolved was calculated as the number of companies dissolved in a given year, region, local authority or industry, divided by the number of companies listed as "Active" on the 1st of January of a given year. Only companies based in the United Kingdom were included in the analysis.

Sam White