Does the North-South divide matter for new businesses?

There may be no literal line separating Wales, anything above the East Midlands and, now, the South West from the rest of the UK but businesses are noticing a difference in entrepreneurial opportunities either side of the figurative one.

But if the divide is widening again, what does it mean for those who are starting a new business?

Ric Traynor, chairman of business rescue specialists, Begbies, said: "As the threat of public sector job cuts became a reality, a North-South divide has begun to emerge with the South-East and London areas showing much greater economic resilience than the rest of England and Wales."

The boost from the Olympics will only stretch the divide which has seen those in The South benefit from higher growth, employment and even life expectancy than their counterparts.

Entrepreneurs will have to consider the same things wherever they are starting up but the emphasis placed upon each aspect may be different. The assumptions are lower costs in the North against higher revenue in the South.

It is clear these assumptions are based on facts.

  • Renting a 400 square foot shop space in Newcastle for a year will cost around £50,000, whilst a shop of the same condition, space and relative location in London will require more than £80,000.
  • In 2010, median gross weekly earnings in those areas classified as The North was £462.79 but this figure was £536.55 in The South.
  • In the most differentiated regions, the North-East's figure was £443.10 compared to London's £606.80.
  • The North has a population density of 274 people per square kilometre, less than a fifth of the 1,488 in The South.
  • This data is greatly affected by the populace of London, with almost 5,000 people per square kilometre, and Scotland, with just 67.
  • In 2009, average disposable household income in The North was under £14,000 significantly lower than the £17,000 in The South.
  • Those living in London enjoying an average of £19,658 in disposable income whilst those in the North-East see £13,026.

From the data and the influence tourism has on revenue, it looks as if The South is the most secure region for new businesses. London attracts tourists like no other area in the UK and beyond this those looking to go to other areas across the county often go to London first.

The North is facing higher rates of businesses in danger due to the public sector cuts but its Business Death Rate, the percentage of businesses closing in the area, was 0.55 points lower than The South.

The North-East recently rose to the top of both the Barclay's Business Regional Impact Report, which covers the areas benefiting most from their small businesses, and the forecast for job creation.

Entrepreneurs in different regions need to alter their plans for the different environments they are working in. This is especially true if your business sells luxury goods as these are affected more by the divide.

Those starting up new businesses should consider if the lower costs of producing in the north will offset any transportation expenses to optimise profits and think about selling goods online as audiences and transport costs are then far less related to the location of production.

Restoring momentum to the UK economy will require dynamic entrepreneurship but London will be swamped with ventures vying to ride the next boom. Given this, it will take an eager eye to see the opportunities in starting a business in the north.

Those considering the option should pay attention to government legislation such the "council of The North" which would include business leaders and politicians to promote growth in areas falling behind London.

The Government supplies grants for new businesses and these will be easier to access if you are starting up in an area in need of growth. Each country has their own agency in charge of regional grants and for more information on each, click on the links below.

England: http://www.englandsrdas.com/

Scotland: http://www.scottish-enterprise.com/

Wales: http://www.legislation.gov.uk/wsi/2005/3226/contents/made

Northern Ireland: http://www.investni.com/

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