The North West is among the best places in the UK for small businesses to achieve high growth, according to new research from the Goldman Sachs 10,000 Small Businesses UK programme.
Over the past 20 years, the region has seen a 212% increase in ‘productivity heroes’; fast growing small companies able to create jobs and simultaneously achieve productivity growth.
Analysis by the Enterprise Research Centre at Aston University finds that the number of productivity heroes in the North West has grown at a faster rate than any other region in the country, including London.
In 2021/2022, there were 3,747 productivity heroes in the North West region, 2,500 more than in 2000/2001.
Productivity heroes play a critical role in driving productivity in the North West economy, employing more than 60,000 people and generating more than £10bn in annual turnover.
The region accommodates the third highest total number of productivity heroes in the UK, with 3,747 companies, behind only the South East, 5,219, and London, 8,212.
North West defies downtrend
The story of these high growth businesses in the UK has not been a straightforward one. The number of productivity heroes in the UK economy grew rapidly from the turn of the millennium up until the 2007/08 financial crisis, however, their numbers have been falling around the country since then.
Only the North West and London have more productivity heroes today than they had prior to the financial crisis. While, Scotland, Wales, the South West, as well as Yorkshire and the Humber have experienced the biggest declines in the past 15 years.
The findings, as well as results of a survey of high-growth potential businesses in the Goldman Sachs 10,000 Small Businesses programme, will be released at an event in Manchester on Monday.
What small businesses say they need
The survey also shows that North West businesses are more optimistic than the rest of the country about the UK’s small business landscape; 79% think that the UK is a good place to run a small business, much higher than the rest of the country (68%). In addition, they are confident in their own potential to grow; 94% expect their revenue to grow in the next three years and 89% expect to increase their headcount.
Despite outdoing much of the rest of the country when it comes to high growth small businesses, the region’s business leaders have outlined a series of policy asks for government.
Leaders of businesses in the North West say that the top priorities for government should be improving access to finance (19%), upskilling the UK workforce (16%), and making it easier for SMEs to trade internationally (12%). While more than half (61%) believe the next government should prioritise physical infrastructure over digital infrastructure, going forward, compared with an even split nationally.
Charlotte Keenan, head of the Goldman Sachs 10,000 Small Businesses UK programme, a free business education programme for high potential businesses in the UK, said: “The research findings demonstrate the North West has a growing, vibrant, and productive small business ecosystem that is growing faster than much of the rest of the country. This is clearly shown in their belief that the UK is a great place to run and grow a small business.
“The high potential businesses in our 10KSB programme have been vocal in our recently published manifesto about what policies could be put in place to improve the conditions for growth. They want government to offer more government-backed finance options, find a solution to the continuing late payment problem and prioritise talent and skills. We know that creating the right conditions for growth has the potential to add at least £100bn to the UK economy and create close to 90,000 jobs.”
