Opinion

Does location impact UK business success?

6 min read

05 August 2013

In May, a Guardian Small Business Network poll asked, "Is location important to your business?" Almost 78 per cent of respondents said yes.

But the stereotypical notion of picking a prime business location may make less difference than we think. 

Is location actually irrelevant to success? Perhaps location does matter, but in ways that are very different and personal to each business in turn.

Diversity of business locations certainly seems to be an upward trend. Secretary of State for Business, Innovation and Skills Vince Cable crystallised the digital economy’s perspective on the subject in the Independent last month. From a technology industry view, locating in a tech hub, ‘Silicon’ glen, fen or gorge was a supposed critical advantage. Now Cable says we have “growing clusters up and down the country,” citing Bristol, Cambridge, Media City, Sunderland, Glasgow and London amongst them.

Top that with the fact that the UK is creaking at the seams with different business support initiatives. From the Technology Strategy Board’s new Catapult Centres and location-agnostic grant funding, to Smart Cities and even High Speed 2, the concept of a single best place for an industry is perhaps diminished. Places with counter-benefits such as less competition for staff and lower rents may become more attractive, especially if transport links improve.

Last week, the finalists of the National Business Awards were announced. I thought it would be interesting to look at the locations of the shortlisted businesses – with a vested interest as ours is one of them! Any guesses on the hotspots for new emerging businesses? 

OK, London, Thames Valley and Brighton are in there, but alongside Burnley, Middlewich in Cheshire and even a barn in deepest Essex. As for the Digital category – London and the South East? Try Cirencester, Northumberland and Sheffield too. Let’s not forget Bromsgrove, Coventry, Lancashire, Herefordshire and in our own case, Hyde in Greater Manchester. This may be anecdotal, but as the recently announced National Institute for Economic and Social Research study has proven, Aberdeen and Central Scotland has the country’s highest concentration of digital companies.

My personal view is that location matters a lot, but the reasons are specific to the business, rather than general to the industry. Yes, certain locations offer great incubation opportunities for university spin-outs, others boast creative hubs, preferential rates or the benefit of being part of something bigger. For us, however, cost efficiency is a primary factor. As we make software for procurement people, being able to demonstrate the efficiency we have within our own business can be compelling – especially as we compete against global software giants and well funded Silicon Valley start-ups. 

Transport links is another – with clients far flung across the UK and globally we’re two minutes from the motorway network, five from a mainline train station and ten from a major airport. Even in a connected world you need to be ‘close’ to your customers. 

We also keep our software development on-shore, and find there is significant benefit to having a relatively untapped and high quality local talent pool. We may be a stone’s throw from the bright lights of Manchester and Media City, but Hyde is a stark location contrast, especially for a technology company. 

The value of right location, wherever it may be, is a view shared by Doug Richard, founder of the School for Startups, which is currently working on creative industry programmes in Kent. “Let’s get one thing straight – location is one of the most important factors in determining business success. The Internet has helped make the world a smaller place to do business, allowing small businesses to easily serve customers regardless of where they’re based. Despite this, the right location can still take a company to the next level and can help determine the very way a company is set up, as well as open the doors to innovation and collaboration.”

There’s no doubting that business location is vitally important for most of us, but as business people perhaps we need to think beyond the usual stereotypes and lure of a ‘tech hub’ or ‘connected city’. The reality is that more and more places across the country are proving to be beneficial business locations, but the reasons for choice rest very much on what the owners and managers of the business perceive as ‘beneficial’ to them.

Daniel Ball is a director at Wax Digital.