Falling number of North West firms could indicate startup slowdown, says R3

A boom in startups launching in the North West is starting to level off, according to research.

The number of active companies in the region fell by more than 1,600 in May, new data from insolvency trade body R3 suggests, on the back of record levels in April.

The decrease is the first recorded since August 2017, when the total number of active firms fell by 66.

It follows two and a half years of solid growth for the North West, during which the number of businesses rose from fewer than 320,000 to nearly 370,000.

As of May, there were 368,167 active businesses in the region. The figure is 0.4% down on the month previous but 17% higher than in December 2015.

R3 North West chair Paul Barber, a partner at professional services firm Begbies Traynor, believes the drop could indicate that new business growth is levelling out.

He explained: “The unprecedented rise in the number of active businesses in recent years reflects the startup culture.

“It is arguable that the people in the North West have tried to embrace that entrepreneurial culture and are more open to running their own business or, in some cases, more than one!”

He continued: “However it may be that the rapid month-on-month growth is simply unsustainable. New businesses are particularly vulnerable in the first few years so we can always expect some fall-out.

“But at the same time changing trends and other pressures have resulted in the loss of many traditional-type businesses. While we have seen a rise in insolvencies recently, other businesses may have chosen to close down voluntarily.”