The current business landscape is pretty unstable. While we are not the first generation to experience pandemics, wars, or a cost-of-living crisis, these things happening all at once can make the odds worse for many new business owners.
That is why Avid Panda has analysed data from Companies House to determine the current failure rate for businesses. Read on to discover the cities with the most and least successful new businesses.
So, What is the New Business Failure Rate?
It’s believed that half of new businesses close within less than 5 years. However, this data shows that the true number of closures is slightly less. The study revealed that almost 40% of new UK businesses have closed in the last five years (2020-2024).
The Worst Cities to Open a New Business
Where you set up your business can impact your potential income, increase your expenses and even limit your future growth. That is why it is important for business owners to seriously consider where they want to set up shop. Here are the cities where new businesses struggle to keep the lights on.
1. Hull
In the 50s, Hull was known for its fishing trade. Now, new businesses are struggling to stay afloat.
The city has the UK’s highest new business closure rate at 44.6%. Of the 8,827 businesses incorporated in Hull since 2020, 3,934 have already failed.
Companies in Hull have recently criticised the government, claiming they are not doing enough to support small businesses in the region. This may explain the high number of closures in the city.
2. Luton
Luton is known for its strong business sectors in aviation and manufacturing. Therefore, it’s surprising that the city is so high on the new business failure rates list.
Of 16,463 businesses incorporated since 2020, 7,212 have already failed. This is a closure rate of 44%.
Though just half an hour from London by train, Luton doesn’t seem as interesting to entrepreneurs as the capital. However, some initiatives are aiming to change the perception of the city. An example is Step Forward Luton, which shares success stories, investment opportunities, and grants to support new businesses.
3. Doncaster
Doncaster is a major logistics port, thanks to its many transport links and central location in the UK.
The city has a new business closure rate of 43.5%. 5,384 new businesses have already closed out of the 12,369 incorporated.
Business Doncaster shares the benefits of starting a new business in the city by showcasing its transport links and providing business advice to new entrepreneurs.
The Best Cities For New Businesses
Though organisations in some cities have seen better days, it isn’t all doom and gloom. There are some exciting opportunities for UK start-ups, especially those looking to launch companies outside of London. Here are the top three cities where new businesses are thriving.
1. Belfast
Belfast is the capital of Northern Ireland and the only Irish city on this list. Known for its tech and finance sectors, it’s become an enticing destination for entrepreneurs.
Belfast has the lowest percentage of new business failures among the 50 most populous UK cities. In the five-year timeframe, 26.4% of businesses failed. This means that out of 13,883 companies, only 2,668 are now closed.
Though London has long been considered the hub of business culture and investment in the UK, Belfast presents an exciting alternative with a growing economy and many investment opportunities for new business owners.
A new £70 million investment from The Investment Fund for Northern Ireland aims to fund businesses across the region, making opening a business in this capital even more attractive.
2. Norwich
Norwich was a hub for the textile and shoemaking industries, but it is now better known as the home of multiple large insurance companies like Aviva.
The city’s new business failure rate is 31%. Of the 10,580 businesses incorporated since January 2020, 3,228 are now closed.
Norwich City Council announced a Local Growth Plan. From January 2025, the new fund will provide £1.1m in business grants to local companies, so there is no better time to start a new business in Norwich.
3. Stoke-on-Trent
Stoke-on-Trent is best known for the potteries. Historically, the city was the centre of ceramics production in the UK.
The rate of failure for new businesses in Stoke-on-Trent is 32%. Of the 13,684 new companies that opened within five years, 4,378 are now closed.
Stoke’s business successes may come from its partnership with local councils in the Stoke-on-Trent and Staffordshire growth hub. Funded by the government, it provides business advice and support on financing, growth, and more.
The Bottom Line
A spokesperson for Avid Panda said, “Though the data shows the struggles of running a business, it also shows the resilience of the companies that have successfully withstood the challenges and are staying open despite the current economy.
“Because of the challenges, choosing where to open your venture is more important than ever. A business can sometimes be limited by location, so it’s essential to research your options and choose the best city, depending on the industry and opportunities.
“New businesses have to balance managing their time and finances with promoting their business in a hypercompetitive industry, so it’s easy to see why so many close within five years of opening.
“But businesses can decrease their chances of closing prematurely by properly utilising marketing, which helps new businesses thrive. Marketing increases online visibility and ensures that as many potential customers as possible know about your company.
“Even though the current rate of business failure in the first five years is 40%, your business doesn’t have to end up in the same boat.”
With an effective Local SEO strategy, you can stay ahead of the competition and target potential customers or clients in your city. Get in touch with our team to discover how we can help you boost your local online presence.
Methodology
We analysed data from Companies House to find the number of new businesses incorporated between January 2020 and December 2024 and compared that to the number that have gone into administration, liquidation, or are now dissolved.
Full Dataset
| City | Number of Businesses Opened | Number of Businesses Closed | % Failed |
| Kingston upon Hull | 8,827 | 3,934 | 44.57 |
| Luton | 16,463 | 7,212 | 43.81 |
| Doncaster | 12,369 | 5,384 | 43.53 |
| Wigan | 6,023 | 2,568 | 42.64 |
| Birmingham | 66,431 | 28,305 | 42.61 |
| Liverpool | 30,700 | 12,937 | 42.14 |
| Wolverhampton | 12,623 | 5,284 | 41.86 |
| Northampton | 14,055 | 5,869 | 41.76 |
| Bradford | 18,226 | 7,584 | 41.61 |
| Leicester | 29,753 | 12,331 | 41.44 |
| Plymouth | 5,965 | 2,460 | 41.24 |
| Mansfield | 4,663 | 1,917 | 41.11 |
| London | 593,588 | 243,839 | 41.08 |
| Sunderland | 4,764 | 1,941 | 40.74 |
| Newport | 6,022 | 2,448 | 40.65 |
| Leeds | 29,720 | 11,992 | 40.35 |
| Manchester | 71,165 | 28,536 | 40.10 |
| Peterborough | 12,425 | 4,980 | 40.08 |
| Walsall | 9,193 | 3,676 | 39.99 |
| Coventry | 22,816 | 9,092 | 39.85 |
| Bournemouth | 8,146 | 3,178 | 39.01 |
| Blackpool | 4,980 | 1,927 | 38.69 |
| Portsmouth | 5,379 | 2,078 | 38.63 |
| Ipswich | 8,532 | 3,296 | 38.63 |
| Slough | 12,354 | 4,766 | 38.58 |
| Dudley | 4,645 | 1,789 | 38.51 |
| Swindon | 7,785 | 2,982 | 38.30 |
| Southampton | 13,819 | 5,257 | 38.04 |
| Sheffield | 18,315 | 6,918 | 37.77 |
| Crawley | 4,536 | 1,712 | 37.74 |
| Warrington | 9,100 | 3,412 | 37.49 |
| Derby | 15,459 | 5,777 | 37.37 |
| Cardiff | 13,532 | 5,050 | 37.32 |
| Preston | 12,712 | 4,715 | 37.09 |
| Glasgow | 44,868 | 16,474 | 36.72 |
| Bristol | 28,485 | 10,413 | 36.56 |
| Milton Keynes | 14,152 | 5,158 | 36.45 |
| Nottingham | 25,981 | 9,336 | 35.93 |
| Swansea | 7,133 | 2,528 | 35.44 |
| Aberdeen | 7,183 | 2,481 | 34.54 |
| Southend-on-Sea | 4,502 | 1,554 | 34.52 |
| Reading | 12,761 | 4,402 | 34.50 |
| Oxford | 10,540 | 3,554 | 33.72 |
| Newcastle upon Tyne | 7,456 | 2,500 | 33.53 |
| Edinburgh | 19,428 | 6,339 | 32.63 |
| Cambridge | 13,959 | 4,502 | 32.25 |
| York | 10,521 | 3,383 | 32.15 |
| Stoke-on-Trent | 13,684 | 4,378 | 31.99 |
| Norwich | 10,580 | 3,228 | 30.51 |
| Belfast | 13,883 | 3,668 | 26.42 |
If you have any questions about our findings, get in touch with lance@avidpanda.com.