What are the best locations and industries for starting a business?

In an ever-changing business landscape, there are no guarantees of business success. But we can use patterns and data to predict which businesses are more likely to take off. At Your Company Formations, we’ve helped hundreds of thousands of people with their businesses: everyone from a teen entrepreneur to a 90-year-old founder. We recently published our business barometer to see exactly what the UK entrepreneurial landscape is looking like right now, whether that’s locations that are booming or sectors that are bucking the trend and taking off. Here’s what every founder can learn from it…

AI in the UK is skyrocketing
New quarterly data has revealed the UK’s sharpest growth in software and AI company formations on record, outpacing every other sector in Q1 2026. Data from our report revealed that while overall UK company formations fell 3.3% year-on-year, the technology and digital sector defied the trend entirely. Technology and digital formations grew 20.4%, largely driven by a huge 86% surge in AI and software development registrations.

Business and domestic software development also grew from 4,035 to 7,506 registrations in a single quarter. The growth was sustained across all three months of the quarter, even including February, when Companies House doubled the cost of digital incorporation from £50 to £100 so you’d expect to see a dip. Technology was the only major sector outside financial services to maintain growth through every month of the quarter, which is hugely impressive.

Brick and Mortar Retail is declining-for now
Whilst AI surged, brick-and-mortar businesses like retail stores and the buying and selling of premises declined. The 86% surge in software and AI registrations shows us that AI businesses are not being deterred by higher costs or regulatory changes being introduced by the government, but brick-and-mortar businesses are. Retail sector company formations declined across all three months of Q1 2026, including a 16.7% drop in March.  The biggest faller is buying and selling of own real estate; its share is down 19%. Letting companies also fell by 9%. Every kind of physical retail lost share: with non-store retail down 31% and clothing shops down 18%. 

However, despite this, online retail remains popular. Online retail is actually the single most popular business in Britain: 36,279 new companies, one in 14 of everything incorporated this year, and in August it reached 8% of the month’s new companies, its highest of the year so far.

The start-up map isn’t just focused on London
Britain’s start-up map is tilting away from London, which used to be the hub. In fact, London’s share of new companies fell 5% year on year, and every London postcode area fell: south-east London by 7%, west London by 6%, north London by 5%.  On the other hand, Scotland’s share actually rose 5%, which matches Companies House’s own figure of Scottish incorporations growing at more than three times the rate of England and Wales. For example, the fastest risers are Motherwell, up 11%, Edinburgh, up 9%, and Norwich, up 9%.

 In terms of locations, our own regional data found that Manchester remains the entrepreneurial powerhouse of the North West, generating more new business activity than any other Greater Manchester borough during the first
half of 2026.

Foreign company registrations are declining sharply
The data also shows that foreign company registrations in the UK fell 49.1% in Q1 2026. The Q1 2026 data reveals that while 206,251 companies were registered in the UK during the quarter, foreign registrations fell at more than fourteen times the rate of the overall market. This is likely due to the Companies House fee increases and ECCTA 2023 identity verification requirements, which have created proportionally more costs and complexities for foreign founders compared to domestic ones. 

We’re moving away from the ‘average’ entrepreneur with booming side hustles
For ten years and hundreds of thousands of customers, the typical person starting a company with us has always been in their late thirties, but today, starting a company has stopped being something you do at a particular age. We’re seeing a real shift in the age demographic of new entrepreneurs, as well as changes in sectors and locations.

For example, there are fewer 18 to 24-year-olds in Britain than before the pandemic, but more of them are starting companies. For the first time in our records, they are founding at the same rate as everyone else, and more than one in ten of the directors we registered this year is under 25. They’re building studios, clothing brands, and e-commerce stores, often at 11 pm on a Sunday, around another job. 

It’s a sign that side hustle culture is booming, and at the other end of the scale, we also found that over-65s are starting their own business at record levels too.  In fact, one in sixteen of the company directors registered by Your Company Formations so far this year is over 60, which is the highest share in eleven years of the company’s records. Entrepreneurs who are over 65 have risen by nearly a third too.

In an online world, traditional trades are still going strong
It’s not just about companies operating from their laptops. We saw an increase in traditional trades too. Taxi operators grew their share of new companies by 24%, plumbing and heating firms by 17%, joinery by 31%, and builders of domestic housing by 13%, showing us that it’s not just about AI businesses and online in 2026.