Millennial entrepreneurs, aged between 18 and 34, are more open to working within business clusters than those aged over 35, according to a new study. This is reportedly because they recognise the benefits of working in a cluster, including networking opportunities, access to skilled workers and proximity to investors and clients.
77 per cent agreed that working with likeminded businesses in a similar field would help their business, in terms of productivity, commercially and competitively. In comparison, older SME owners opted for convenience and a location that tied in with family commitments.
This according to new research from Opus Energy, which has revealed that only a minority of SMEs are taking advantage of government driven initiatives such as business zones or industry-driven business clusters. These businesses run the risk of ignoring the possible collaborative opportunities and financial benefits that come from working in business clusters.
Younger entrepreneurs were found to be the most open to working collaboratively with other businesses, with older entrepreneurs fearful of the competition. The research showed that young entrepreneurs aged 18 to 24 were most likely to consider available talent in the local area, along with skill sharing and networking opportunities, when deciding on the location of their business. Older entrepreneurs, in comparison, prioritise convenience and family commitments, while others admitted the location of their business was in fact a fluke.
“Opus Energy started in business clusters, both in Northampton and then in Cardiff, to capitalise on the skills available and the results speak for themselves – it’s helped our business to grow extensively, and we’ve benefited from the high-calibre local talent on offer,” says Nikki Flanders, Opus Energy CEO.
“There are so many factors which can decide a good or bad location. How we run businesses is changing, so the benefits of clusters can’t be dismissed. Talent, networking opportunities and cost savings are there for the taking, if entrepreneurs are prepared enough to look farther afield.”
For small business owners, investing more time in deciding their location could make a significant difference. Over a quarter of SME owners knew instantly where they wanted to set up their business, while a further 11 per cent had decided within a day. Almost another fifth had made the decision within a week.
“Setting up a business is not a small undertaking, and there are many important decisions to be made before a company is born. Regional initiatives are available to businesses to help them progress – for example, the government’s Regional Growth Fund or business grants from local councils – so it’s worth investigating a range of locations for your start-up, even if they’re not so convenient.”
The Opus Energy research showed that a reliance on the capital remains a strong factor for entrepreneurs’ choice of start-up location. 2016 saw a record-high for businesses being founded, with 650,000 start-ups established during the year. Of these, 205,325 businesses were set up in London, in comparison to just under 10,000 in Manchester or 8,000 in Leeds. However, the competitiveness of other regions is growing, with start-ups on the increase and business clusters helping to drive this transformation.
“Within the UK life sciences sector, we have some well-developed regional clusters, such as The Golden Triangle of Cambridge, London and Oxford,” says Sarah Haywood, CEO of life sciences cluster MedCity. “The region brings together different components of an effective ecosystem including businesses, leading research institutions and universities, investors, hospitals, talent, well developed support and professional service and patients, to create a world-leading region for research, collaboration and innovation.”