It's easy to get lost in the superlatives when talking about doing business in
London. Everything is bigger, faster and more vibrant in this global city -
but does that help the entrepreneur?
Not necessarily, according to Timothy Barnes, executive director of UCL
Advances, a centre for entrepreneurship. “London is a great place to start a
business, but not to grow it,” he says. “London is very expensive.”
For the budding entrepreneur, the capital has it all - academic courses, free
advice, grants and networking opportunities, often reflecting the city’s
huge ethnic diversity. And for multinational businesses, London’s position
as one of the leading financial centres in the world makes it critical to
success: a third of the top 500 companies have their European HQs here.
However, this success brings high wages (the average salary in London is
£11,000 higher than the rest of the UK, according to one recent report) and
expensive commercial rents (prime rents in the West End stood at £110 per sq
ft in the second quarter of 2008, according to Knight Frank, compared with
about £18 per sq ft in Bradford). “Everything will cost more, from the price
of an advert in the local newspaper to the cost of transport,” says Phil
Cox, head of commercial banking for London at Bank of Scotland Corporate.
London may have more enterprises than any other region in the UK (a total of
758,000 at the start of 2007, according to the latest statistics published
in July by the Department for Business, Enterprise & Regulatory Reform),
but it has the lowest proportion of businesses with between one and 49
employees - 21% compared with the northwest’s 28%.
The capital certainly attracts plenty of money - it took by far the lion’s
share of venture-capital investment in 2007, according to a British Private
Equity and Venture Capital Association report, accounting for 48% of the
total UK investment. And in certain sectors, such as creative industries,
the benefits of London might well outweigh the downsides: one in eight
London jobs is in the creative sector, according to the Greater London
Authority.
Similarly, the draw of London as a financial hub cannot be overestimated. It
topped a global index of financial centres, according to a City of London
report published in March. The proportion of London’s working-age population
employed in financial and business services is about seven percentage points
higher than that for the UK for the past two decades, ensuring the financial
skills base is high.
But manufacturing sees a different side. London lost a third of its industrial
jobs between 1985 and 2006, a more pronounced rate of decline than the rest
of the UK. Although if you are working in high-tech medical research, London
has some of the finest academic establishments in the world (London’s higher
education institutions attract more than $102m [£58m], nearly a third of
government funding for medical, dental and allied research).
Size and diversity characterise the city’s workforce. London has Europe’s
largest regional workforce, more than 9m, of which a third are educated to
degree level. Nearly a third are from black, Asian or other minority ethnic
groups, and over the next 10 years these groups will account for 80% of the
increase in London’s working-age population.
As a commercial environment, the capital is always a work in progress. Large
developments are planned for King’s Cross, Greenwich and Brent Cross, while
the Crossrail scheme could transform commuting for the better. And, of
course, there’s the 2012 Olympics, with the 587-acre Olympic Park the
largest regeneration project in Europe. This is being trumpeted as an
unrivalled opportunity for entrepreneurial businesses, although not everyone
agrees. Only one in 10 entrepreneurs across the country think the Olympics
will have a positive impact on their business, with 71% believing the Games
will have no impact at all, according to research from business advisers
Tenon. Among London entrepreneurs, 40% believe there will be no impact on
smaller businesses in the capital, and only 16% believe in a positive
impact.
Barnes sees the Games as an opportunity. “The value is less to do with the
contracts than with it being an event that kickstarts other projects - there
will be a transport upgrade, the city will be cleaned up, the Olympic
village will be turned into offices,” he says. “There will be a big jump
around the flow of money into London, and SMEs will be just as well placed
to take advantage of that as larger companies.”
“Crossrail scheme could transform commuting for the better.” The questions this raises include the following: How many people in London are not commuters? How many are unemployed? How many are leaving schools with no qualifications? How many are homeless? How many are not able to get the start up?
Muhammad Haque, London, UK