by Steph Fiala, COO of flubit.com
There are many reason for running and growing a start-up in London – with a large population and plethora of events, it’s a great place to network and find the talent & connections you need. Nevertheless, as with everything it comes with its own challenges – namely, everything costs more – not limited to, but including the aforementioned talent.
To start with the benefits, as a start-up you often need to raise money – from investors to family funds, venture capital funds (there’s over 80 of them in London) or any other means. This will generally require quite a few meetings – many of them at short notice so being able to be close by often comes in really handy.
More than that for many VC’s the location of your business will increase your chances of raising money – if you are a tech business for example, it will be important to you to have access to tech talent and that’s not always equally distributed across the UK.
As a tech company, we started out on “Silicon Roundabout” in Old Street and found this to be pivotal when talking to investors. When it comes to investing into tech companies, they are investing into the IP you will manage to create; and the quality of that will depend on your team.
Which leads me onto my next point, the most important reason to consider running and growing your business in London is talent. No matter what industry you are in, finding the right people to help you run a business or even your chances of finding them are higher in London than anywhere else; and even if you really struggle to find somebody local, it’s easier to attract somebody to relocate here.
This holds true for employees as well as consultants on all different subjects. There will be specialised fields for where the vicinity of a university or an association in that specific field provides an advantage, but in tech and other related fields you may definitely want to consider starting up in London.
Lastly, another great advantage is simply access to resources – this can range from the ease of meeting people who can provide services you to, to how easy it is to have a company day out. Train up your staff by attending conferences, meet ups, or training sessions of any kind is incredibly easy to arrange as there’s a never-ending list of events, consultants, seminars and workshops available at your doorstep. Additionally, if you have international clients or need to travel abroad frequently London with its high density of nearby airports can make it easier to plan your trips to suit your schedule.
Now that we’ve established that, it is definitely worth considering starting and growing a business in London – you get access to funds, talent and resources which means you can get the best chance at success – let’s go over some of the issues that come along with it.
Everything will cost more, so whilst it might be easier to get funding you will go through your money a lot quicker. According to findalondonoffice.com and okta rent in London ranges from £68 – £143 per square foot (a year) which is considerably higher than places like Bristol, Leeds, Manchester or Birmingham where prices are half or even two third cheaper.
The same is true of the talent you hire, based on Office for National Statistics based on a April 2017 survey, median weekly earnings were £692 which is £118 extra a week than the second highest region. The median in the whole of the UK is £550 (this includes London).
Sadly, whist you might be paying your team more than anywhere else, this does not necessary equate to a higher living standard for them as rent, travel and other costs are mostly higher than anywhere else in the UK.
As many companies choose London to be their base (for some of the very reasons mentioned above), it may mean that in specific sectors competition for talent can get especially tough. This is often the case in certain industries where talent is limited and large corporations have a headquarters in London. This is turn drives the higher salaries as employees jump from one job to the next trying to increase their standard of living.
For example, in tech, based on Hired research, a junior developer with a year or less of experience can expect to make an average salary of £39,000/year jumping to £48,000 a year after 2 years of experience.
As an employer if often means spending a lot of resources on training staff – which many times don’t have the required skills even if they’ve just graduated from university in the correct field – who then move on to a next job quickly afterwards taking any training with them. I can only assume this is a trend reflected in any other competitive industry.
Therefore, whilst I encourage starting up and growing a business in London I would advise that costs are taken into account and quite a bit of research is done in terms of rental costs as moving a company can be very pricey. Additionally, measurements should be put in place to help you keep your talent (incentives such as options, remote working and flexible working are very popular).