Analysis of Companies House data by award-winning Birmingham-based digital marketing agency Avid Panda found that 2 in 5 businesses launched since January 2021 have already closed, gone into administration, been liquidated, or been dissolved.
In total, 2,131,947 businesses were incorporated across the UK between January 2021 and December 2025, and of those, 879,991 have already shut. That’s a new business mortality rate of around 40%.
In response to the findings, a spokesperson for Avid Panda said, “These figures don’t come as a surprise when you look at how tough the current environment is for business owners. Costs are rising across the board, and things like increases to employer National Insurance contributions and the national minimum wage are adding even more pressure, particularly for smaller or newer businesses that are already working with tight margins.”
For many business owners, the first few years are when the company is at its most vulnerable and making it past the 5-year point can be a key marker for future survival and success.
Avid Panda explains, “For a lot of startups, there just isn’t much room for error. Generally, cash flow is limited in those early years, so when overheads suddenly increase, it can be incredibly difficult to absorb those costs and keep things running.”
The research also looked at the 50 most populous UK cities to identify where new businesses appear to face the greatest challenges.
The cities with the highest business closure rates were:
- Wolverhampton (49%)
- Mansfield (48%)
- Luton (46%)
- Birmingham (45%)
- Dudley (44%)
At the other end of the ranking, the cities with the lowest closure rates were:
- Norwich (33%)
- Cambridge (34%)
- Reading (34.6%)
- Oxford (34.8%)
- Swansea (35%)
“Location still plays an important role,” Avid Panda’s spokesperson said, “with some cities simply providing better conditions, whether that’s lower costs, stronger demand, or more opportunities in certain industries. When margins are already under pressure, this can make a real impact on whether a business makes it past the 5-year mark.”
For entrepreneurs, these figures don’t mean that starting a business in a higher-risk location is a bad idea. Instead, it suggests that understanding local competition, customer behaviour, recruitment challenges, and operating costs is crucial in helping business owners make more realistic decisions before fully committing to a location.
But the main takeaway from this data, for Avid Panda, is the importance of support for new and small businesses, no matter where they’re based.
Avid Panda suggests, “It’s so important that new and small businesses are properly supported. They’re a huge part of the UK economy, but they’re also the most vulnerable when conditions get tougher. Without the right support, we risk losing a lot of good businesses before they’ve really had a chance to grow.
“Ultimately, starting a business has never been easy, but right now it feels especially challenging. These numbers highlight just how important it is for founders to plan carefully, and for communities to do more to help them succeed.”
