Royal Mail: east London is top for new businesses

Design entrepreneurs in east London are in the country’s hot spot for starting new businesses, according to research by the Royal Mail and Wegener Direct Marketing.

New companies across the UK’s 121 main postcodes were analysed from January 2003 to January 2004, examining both start-up culture and overall performance.

The investigation is good news for the designers already in the area, as well as those considering joining the cluster. Jane Colgan, manager of East London Small Business Centre, says, ‘More than 80 per cent of businesses survive here after three years – a higher figure than the national average.’

East London is not alone in its success, according to the research. The results showed Ilford, Birmingham and Sunderland as having very high percentages of growth in business start-ups. The top 20 postcodes also included a number of smaller towns, reflecting growing flexibility in start-up businesses.

The Royal Mail Map of Business Start-ups investigated two million companies. Part of the research was for the Royal Mail’s Business Success Barometer, which analyses performance to show which postcodes have the highest proportion of successful businesses.

The overall performance indicator examined the percentage of start-ups, employment growth and profitability of a region (a pre-tax margin of more than 10 per cent). The top of this list is again dominated by east London (London EC), however, the two tables do not map against each other.

Although it would be impossible to compare the lists, it is important to note which regions historically have been overall successes against new-starters.

For example, employment growth among new businesses in London E is ranked 94th (ten places down from last year) and in London EC is ranked 2nd (one place down from last year).

Colgan says, ‘The report that east London has the highest proportion of new businesses doesn’t surprise us. We’ve been working with entrepreneurs in the area for 25 years and we help over 350 people a year to start businesses up.

‘There is an entrepreneurial flair among the artists and the creative industries, who are good at what they do, but they may not know how to start a business. We help them with market research and business plans.

‘Every year we hold exhibitions for our artist and design clients at no cost. It’s an opportunity for them to display and sell their work – we take no percentage of the profit. In the past they have been very successful.

‘This area is seen as one of poverty, but there are people who want to succeed. We find it very rewarding to see businesses make their first £1m turnover.’

Daljit Singh, director of Digit, based in east London’s Hoxton Square, says, ‘The city has extended naturally. First the artists came to the area and that attracts bars and clubs and then the creative companies follow.’

There appears to be a trend emerging: smaller, traditionally less expensive areas have a high proportion of new businesses. Simon Waterfall, creative director of Poke London, based in the Tea Building in east London, suggests that for design, an area must be ‘well connected’ in terms of both transport links and community.

‘Small start-ups need mates,’ he adds. ‘You might not have a photocopier, but your friend might, so you can share resources. One group of mates or one body of people will bring others. There is no competition between design companies – we collaborate.

Top regions of business success

Start-ups Overall performance Overall performance (london)
1 London E Milton Keynes London EC
2 Ilford Bournemouth London SE
3 Birmingham Colchester London W
4 Sunderland Gloucester London SW
5 Manchester Chelmsford London WC

Source: Royal Mail

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