Starting a business is never easy, with so many different variables at play. One factor that has a dramatic influence on how successful a new company can and will be is its location – not only nationally, but regionally too.
In fact, new research suggests that geography actually plays a far bigger role in entrepreneurial success than many founders realise. A study recently published by BusinessesForSale.com, which analysed 45 UK cities, has revealed that several of the country’s most prominent business centres are also, surprisingly, among the most difficult places to sustain a new venture.
The findings challenge popular narratives around opportunity, infrastructure and startup culture in Britain’s cities. Importantly, however, they also expose a widening gap between entrepreneurial ambition and the practical realities founders face on the ground.
Measuring Entrepreneurial Health Across the UK
To understand where startups struggle most, the study assessed each city against five weighted indicators: business density, interest in entrepreneurship (based on search behaviour), availability of co-working spaces, five-year business survival rates and levels of self-employment. The data was sourced from the Office for National Statistics, Google Ads keyword trends, Coworking Cafe and Nomis labour market statistics, and the analysis in the report covered a period from the beginning of 2025 to January 2026.
The results paint an uncomfortable and slightly unexpected picture.
Southampton emerged as the most challenging city for entrepreneurs, with only 26.2% of businesses surviving beyond five years – a very tough point for startups to make it past.
Manchester and Birmingham followed close behind, ranking second and third worst, respectively, despite their reputations as thriving economic hubs.
Naturally, the question many people are asking is how and why this conflict exists – how can some of the busiest, most economically active locations also be bad for starting a business?
Southampton’s Startup Survival Crisis
Southampton’s bottom ranking is driven by a combination of low business survival, weak infrastructure and limited entrepreneurial activity. With just one co-working space per 100,000 residents, the city offers little in the way of structured support for founders. Its low business density and weak search interest in entrepreneurship-related terms further suggest an ecosystem where new ideas struggle to gain momentum. And in an environment in which creativity and entrepreneurial spirit aren’t nurtured and encouraged, it’s not surprising that it’s an area that’s tough to start a business.
For founders based in the city, the data points to an environment that can make an already difficult journey significantly harder.
When Big Cities Become Tough Markets
Manchester and Birmingham’s poor rankings come as a surprise to many. Both cities are often portrayed as hotbeds of innovation and enterprise, but somehow, the data indicates that new ventures face serious headwinds.
In Manchester, extremely low levels of entrepreneurial search interest suggest a lack of grassroots momentum. In Birmingham, while there is a higher concentration of businesses, the five-year survival rate remains under 30% and co-working infrastructure is limited. Essentially, the research suggests that market saturation, combined with weak support systems, may be making it harder for new businesses to find space to grow.
High Ambition, Low Outcomes
Some cities show strong enthusiasm for entrepreneurship but struggle to convert that energy into sustainable businesses. Stoke-on-Trent recorded the highest search interest for entrepreneurship in the study, but the city still ranked among the ten worst cities overall due to poor survival rates and limited infrastructure. Sunderland and Liverpool show similar patterns, where motivation and business activity exist, but long-term outcomes remain weak.
These findings highlight a structural problem. The desire to start a business is clearly present in many communities, but without the right ecosystem in place, that ambition often fails to translate into success, which is a great shame given that entrepreneurial spirit and ambition in business are not things that exist everywhere. Unfortunately, though, without the means to make it work practically, these things don’t mean much.
Why Ecosystems Matter More Than Ever
The research highlights the essential role of local ecosystems in shaping entrepreneurial outcomes. Co-working spaces, mentoring networks and business communities may seem like small things, but they provide more than convenience – they offer knowledge-sharing, collaboration and resilience. Cities that don’t have these foundations risk leaving founders isolated, under-supported and more vulnerable to failure.
The difference between a city where startups thrive and one where they struggle is often less about individual talent and more about the strength of the surrounding environment.
A Wake-Up Call for Both Entrepreneurs and Policymakers
Of course, no one study or set of research ought to be accepted as the gold standard for anything, but it certainly does indicate some important things about how important location is when starting a business. And here, this study offers an important lesson for both founders and decision-makers.
For entrepreneurs, it reinforces the value of understanding local conditions and actively building support networks. For policymakers, it highlights the urgent need to invest in infrastructure that nurtures sustainable entrepreneurship.
As the data shows, starting a business will always involve risk, but with stronger ecosystems, those risks don’t have to be stacked so heavily against founders from day one. There’s a lot that can be done to make things easier from the get go.
