London leads UK in setting up new businesses

Tim Wallace
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TENS of thousands more firms were created than closed in the first six months of 2013, with London leading Britain’s entrepreneurial drive, according to a Barclays report out today.

The total number of active firms jumped by more than 90,000 from the end of 2012 to June 2013.

That took the total up 3.4 per cent to 2.82m, accelerating from the three per cent rise seen in the previous six-month period It suggests fewer firms are failing and more are being set up.

London saw the biggest rise, with another 12,000 active firms in operation, a 3.5 per cent rise to 372,340.

Barclays’ report put that success down to the global nature of the capital’s economy as well as stability in its government.

Meanwhile the report found entrepreneurs’ need for finance to start their firms declining, with increasing numbers able to set up online businesses cheaply.

The study found eight per cent of startups needed no money to get going, while another 49 per cent needed less than £2000.

“The internet plays a significant role and the ‘kitchen table tycoon’ has very low overheads,” it said.

“It is eminently possible to run a successful business with a relatively low amount of capital and many businesses don’t require substantial funding even down the line.”

Of those that do require funding, very few turn to banks at first – 84 per cent use their savings, 12 per cent use a credit card and 11 per cent borrow from friends.

Just five per cent take a bank loan initially, and four per cent use their overdrafts.

And Barclays also found new firms unwilling to take equity investment, favouring debt or thier own sources of funds. Just one per cent of small- and medium-sized enterprises told the study they would consider outside equity investment.