The best cities to start a business: The Dojo 2021 index

In February, we brought you the best places to start a business from, remotely. It looked at the places where self-made starters could turn their hobbies or side-hustles into an income during a more turbulent economic period. 

As we slowly look at reopening our offices and hope to head back to some normality, we've looked at which cities in the UK are the best for starting a business in general. 

With many people moving out of major cities to more-affordable commuter towns, our index considers whether the shift out of central economic hubs has made budding entrepreneurs rethink their business location. 

Based on data points such as the five-year startup survival rate of new businesses, cost of living and average weekly full-time salary, we've calculated and ranked the cities that have great potential for starting a new venture. 

Additionally, we consider which cities help women become their own bosses by looking at the locations with the highest number of self-employed women and the lowest gender pay gap. 

See the top five break down and the complete list below.

1. Wolverhampton 

Once prolific for bicycle manufacturing, the West Midlands city took the number one spot to start a business in our 2021 index. Just North West of Birmingham, it's the second-largest city in the West Midlands with a population of 256,600 people.

In 2019, Wolverhampton and the Black Country had the fastest economic growth than any other UK area outside of London. The region's GDP increased by 3.2% between the last quarter of 2017-18, which is more than double the UK average growth rate of just 1.5%. 

With increased construction and services industries moving to the city, Wolverhampton's economy is performing well. 

Its central location means that it's already seen large firms such as Jaguar Land Rover, Aerospace and Marstons invest their operations there, providing an extra 1,400 jobs. 

Its five-year startup survival rate was 39.8%, one of the highest across our research. And the local council's Strategic Economic Plan to attract investment and encourage new business and innovation show the city's dedication to nurturing new business opportunities. 

Top index scores

• Five-year startup survival rate: 39.8%
• Average monthly rent: £576
• Average full-time weekly pay: £574

2. Wakefield 

Just east of the Pennines and nine miles south-east of Leeds, the city of Wakefield sits on the River Calder.

Despite seeing an economic decline in the late 20th century due to mine closures, manufacturing has remained a crucial employment sector for residents. 

This year Wakefield is gearing up for an economic renaissance with investment and local spending in core areas. 

It's last regeneration projects in 2010 led to new commercial spaces and affordable offices, which were perfect for those starting a small business. 

In 2021 Wakefield local council announced investment plans of £355m across the next four years, ideal timing for startups seeking investment and local kickstarter grants. 

The city has also secured £4 million in government funding for creative and digital sectors. The aim is to help businesses thrive and grow while creating employment opportunities for local talent.

Along with the investment in business growth, the city will see a budget of over £25 million spent improving its infrastructure, accommodation, and connections, which will help bolster tourism once coronavirus restrictions are lifted. 

Top index scores

• Five -year startup survival rate: 40.8%
• Average monthly rent: £573
• Average full-time weekly pay: £537

3. Stoke-on-Trent

Home to the 'Potters', Stoke is synonymous with pottery production, after leading brands Wedgwood and Royal Doulton were founded there. It's unique in that it's the only polycentric city in the UK – meaning that it's a city of five towns. It came in third place in our index with high scores for startup rates and average weekly salary. 

Aside from many ceramic factories, the city boasts around 9,000 other large firms, including Bet365, founded by Stoke City FC's chairman. Sainsbury's and The Co-operative Pharmacy also have large bases there. 

Last year Stoke had the fastest employment growth in the UK, with 8,000 jobs in the city across the previous five years. 

To help kickstart the economy after a turbulent economic period, the local council is looking to increase public spending to invest in the city's economy.

The city nurtures small and local businesses with the Stoke-on-Trent Live Business Awards. These awards recognise the hard work of local companies, from startups to young professionals. 

Top index scores

• Five-year startup survival rate: 39.2%
• Average full-time weekly pay: £536

4. Sheffield 

Sheffield is a member of the Core Cities Group – an advocacy group dedicated to supporting local sustainability across the economy, infrastructure, climate change and culture. The city has a population of over 569,000 people making it England's fourth-largest city.

More recently, the city, known for its steel production, has attracted significant investments from global firms, including McLaren and Boeing. 

It came in just outside of the top three in our index and had impressive low business churn rates of 1.6%.

In the local council's strategic economic plan for 2020-2040, they announced that they want to triple the investment to £1.1billion to support innovation across businesses and startups. 

Top index scores

• Five-year startup survival rate: 41.6%
• Average full-time weekly pay: £540

5. Southampton 

Southampton made third place in our top cities to start a remote business index last month and sneaks into the top five top cities overall. 

Heralded as the 'super cluster', the South Coast city is a growing tech hub, with Starling Bank opening up its new office in 2019.

The city, whose university is a world leader in technological advancement and research, was awarded a top five Super Cluster status for technology by the EMEA, trumping Cambridge and Bristol. 

More than 7,400 businesses are based in Southampton, and incoming investment will provide 24,000 jobs by 2030. 

Top index scores

• Five-year startup survival rate: 42%
• Population size: 269,750

The full index

The best cities for women to start a business

As well as looking at the best places to start a business in general, our index looked at cities that had a high number of self-employed women who had started their successful businesses. We also considered the number of women employed in these cities as this shows access to equal opportunities in employment.

See the top five places for women to start a business in 2021, and the complete list below.

1. York

Founded in 1864, the Rowntree confectionery factory in York was unusually progressive for it's time in that it employed many women for the factories.

Today York is proudly championing it's women-owned and run businesses, with women-only-networking groups such as MPWR, a group enabling growth and knowledge sharing across the city. The city has 9.2% identified self-employed women and 66.3% women in work.

2. Wakefield 

Wakefield scored second place in both categories, with the number of women employed at 66.2 and 5.1% of women identifying as self-employed. Like York, the city has several networking opportunities for women, including Wakefield Women's Business Club.

3. Stoke-on-Trent

Like Wakefield, Stoke-on-Trend was also consistent in its score across both indexes.

As mentioned above, Bet365, a hugely successful gambling platform, is based in Stoke and was founded and is run by Denise Coates – the best-paid female executive in the world. Denise was paid £265 million in 2018. For reference, Tim Cook, the CEO of Apple, received £80 million.

4. Sunderland

Just short of a top-five place in the main index Sunderland is fourth for best places to start a business for women. The North-Eastern city has 62% of women in employment and 4.4.% self-employed women.  

Although the North East admits that diversity in businesses is lacking, there are several strong female leaders across the North East in companies such as Virgin Money's Jayne-Anne Gadhia and Alice Hall, the founder of the Pink Boutique.

5. Wolverhampton  

First, in the best cities index, Wolverhampton dropped four places to fifth when we analysed data on female employees and self-employed women in the city. It has 62.1% of women employed and 4.7% of women identify as self-employed. 

Wolverhampton is not short of female success stories though. Caitlyn Moran, a successful journalist, comedian and best-selling author, grew up in Wolverhampton. Last year, entrepreneur and founder of the plastic-free cosmetics company Stript Becky Shuck used Natwest's Back Her Business incentive to raise £2,000.

The full index

If you're looking to start your own business and need help accepting card payments securely and efficiently from your customers, see how Dojo card machines can help.