Dorchester – the Number One Place to Start a Business in the UKMonday, January 4th, 2010
According to new research by credit Insurer, Euler Hermes UK, firms in Dorchester are the least likely of all businesses in the UK to fail.
The town has the lowest insolvency rate in the UK (0.17%), and heads a list of 10 British towns and cities that includes Inverness (0.17%), Guildford (0.19%) and Canterbury (0.26%).
The rate of failure of businesses in the town has also fallen (from 0.20% to 0.17% – a fall of 18% year-on-year).
At the other end of the country, businesses in Yorkshire and Humberside are failing at a faster rate than any others in the UK. Sunderland is the City with the highest insolvency rate (2.74%) against a national average of 1.12% according to proprietary research published in the Euler Hermes UK’s newly-launched Quarterly Economic Bulletin.
The Bulletin contains a risk ‘heat map’ that clearly shows businesses in the North of England failing at a quicker rate proportionately than their colleagues in the South. As well as Sunderland, the towns/cities of Bolton (2.54%), Manchester (2.30%), Leeds (2.06%) and Sheffield (2.00%) all feature in the top ten, with four of those cities occupying top slots for two consecutive years.
Location is important in determining businesses under pressure, according to Matt Williams, Regional Risk Office Manager:
“The difference in levels of insolvency across the UK and Ireland are vast,” he says, “and Dorchester has been in the bottom 10 for the past two years.”
Convention dictates that ‘big’ is better when it comes to withstanding an economic downturn, yet this is not born out by the facts.
“Small companies with shareholder funds of less than £100K are actually less likely to fail than those with substantially larger resources,”
Mr Williams continues.
“It is only when we look at companies with shareholder funds of more than £5 million that the insolvency rate really starts to come back down. Businesses falling in the bands in-between show considerably higher rates of insolvency.”
Convention similarly dictates that younger firms are at greater risk than their older contemporaries, but again this appears not to be the case: “In fact the opposite seems to be true,” Mr Williams adds. “New companies (i.e. less than one year old) have been by far the most unlikely to fail, and most issues occur within those businesses that have been sold for the first or second time.”
The data, gathered by specialist teams within Euler Hermes UK’s regional Risk Offices, also shows that the rate of insolvencies in Ireland is only just above the UK average (1.19%). Insolvencies in Ireland have increased by 38% from the same period last year (Q3 2008) and by a huge 236% from the full year in 2007.
Other severe deteriorations from 2008 to 2009 (YTD Q3) include the North East (43% increase), Northern Ireland (29%) and the Midlands (37%). The average increase in the period in the UK was 16%.
In terms of the types of businesses failing, the fastest rate of insolvencies is being felt within the Furniture sector (4.86% – up from 3.30% in 2008), Glass Manufacture (4.24% compared to 2.36%) and Metal Fabrication (3.72% from 2.02%). The biggest failures by volume are focused in the Construction and Property sectors (31% combined).
The insolvency rates of the ‘traditional’ manufacturing industries appear to have suffered much more than service-based industries and even retailers, according to Mr Williams:
“Virtually one in every 20 furniture companies have failed in the first nine months to September 2009,” he says, “and this is a most worrying statistic.”
So, out of all the towns in the UK, we have come out rather well, in fact not just in the top ten, but Dorchester is officially the NUMBER ONE best place to start a business – as it is has the lowest insolvency rate of ANYWHERE in the UK.
What it does mean is that if you have a good business idea, sufficient financial resources and you have done your market research on potential demand, then there is no better place in the UK to open your business!!
Happy New Year everyone.