Philip Brennan, Founder and MD at BusinessComparison, comments: “It was really interesting putting this research together. We weren’t surprised to see that London is the region with the youngest businesses on average - but in Barking and Dagenham, Newham and Hackney, the average age of businesses is actually under five years.

“Some aspects of the research might seem worrying to entrepreneurs and people hoping to start their own business soon. The average age of a business when it dissolves has now dropped below five years, to only four years and four months. However, there is plenty of support available to new businesses, including government grants, and Local Enterprise Partnership (LEP) Growth Hubs around the country where you can access up-to-date advice.”

Industries with the Youngest Active Businesses

• Postal and courier activities: 5 years 8 months
• Public administration and defence; compulsory social security: 5 years 10 months
• Employment activities: 5 years 11 months
• Food and beverage service activities: 6 years 1 month
• Repair of computers and personal and household goods: 6 years 4 months

The industries with the youngest active businesses could cater to either a consumer or business client base. Food and beverage service activities is perhaps the industry people may be least surprised to see in this list - it’s a perennially popular type of business to start.

The Youngest Active Businesses in the Country

• London: 7 years 2 months
• North East: 8 years 0 months
• North West: 8 years 0 months
• Wales: 8 years 3 months
• West Midlands: 8 years 4 months

London’s businesses are, on average, 10 months younger than those in the North East. The others are all very close together, with the North East and the North West’s businesses both averaging 8 years old.

• Newham: 4 years 4 months
• Barking and Dagenham: 4 years 5 months
• Hackney: 4 years 7 months
• Camden: 5 years 4 months
• Islington: 5 years 5 months

The local authorities where you can find the youngest businesses are all in London. Companies in these local authorities are younger by at least 2 years than those in the region of London overall.

Startup Dissolutions

Are a higher proportion of businesses dissolving before they reach 5 years in business than ever before?

The average age of businesses that were dissolved went down in 2023, dropping to 4 years and 4 months. In 2022, the average age of dissolved businesses was 5 years and 2 months. It’s true that businesses are dissolving in the shortest time period, but the average age of companies that close has dropped below 5 years before - in 2017, 2018 and 2021.

The average age of dissolved businesses varied by region. The regions where companies dissolved the earliest on average were as follows:

• London: 3 years 6 months
• Wales: 3 years 7 months
• East of England: 4 years 10 months
• Scotland: 4 years 11 months
• West Midlands: 4 years 3 months

BusinessComparison also identified the industries in which businesses dissolved the youngest.

• Services to buildings and landscape activities: 2 years 8 months
• Public administration and defence; compulsory social security: 2 years 8 months
• Residential care activities: 2 years 9 months
• Manufacture of tobacco products: 2 years 11 months
• Repair of computers and personal and household goods: 2 years 11 months

The only industry that appears on both the list of the youngest dissolved businesses and the youngest businesses overall is computer repair.

It is not surprising to see tobacco manufacturing companies closing down earlier than peers in other industries, as the UK government is cracking down on smoking and vaping.

It’s undoubtedly true that the average age of dissolved businesses has lowered, suggesting a difficult economic environment for startups. But between 2022 and 2023, 563,847 new businesses were registered.

This research shows that there are a huge number of new startups in the UK, across a wide range of industries. Entrepreneurs and new businesses are thriving across the country.