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To Cluster or Not to Cluster: What Clustering Means For Business Costs

To Cluster or Not to Cluster: What Clustering Means For Business Costs

It was only a few years ago that clustering in the UK wasn’t really ‘a thing’. We all knew of California’s famous Silicon Valley, but, apart from a few niche areas of London – Notting Hill as the home of the capital’s fashion scene, for example – we’d have been hard pressed to really identify anything as really being a cluster. Fast forward to today, and regional clusters are huge. In fact, Tech Britain officially identifies 32 tech clusters alone all around the UK. So what does clustering mean for your business?

From a small business perspective, there’s both advantages and disadvantages to clustering. Small businesses in many different industries could see advantages including but not limited to:

  • Motivation and inspiration from similar businesses in the field
  • Easy to identify development opportunities
  • Simple to understand potential for growth
  • Easy access to suppliers and providers
  • Boosts both local and international reputation
  • But what about the disadvantages? Unfortunately, there is a downside to clustering, and that’s business costs. Most notably, it’s the cost of business space for rent. Businesses in successful clusters are like celebrities – everyone wants to move in next door – which puts the cost of business space for rent sky high. Clustering is one of the contributing factors towards the rising cost of business space for rent all across the UK, especially in areas such as Manchester, Edinburgh, Cambridge, Bristol, and South Wales which are all emerging as popular regional clusters. The Government has even announced that South Wales has been ‘one of UK’s fastest growing tech clusters’ this year. So how can businesses get the best of both worlds – the advantages of clustering, without tying up essential financial resources?

  • Be flexible when it comes to finding a business space for rent in the cluster. Consider alternatives you might not have thought of before, such as serviced offices or coworking spaces which can help to cut commercial property costs while still giving you a prime location.
  • Consider a business space for rent in the cluster that’s not ‘perfect’. Did you know that we tend to vastly overestimate the amount of space we need in an office? The Health & Safety Executive report that each employee needs just 11 cubic metres of space to conduct their job effectively.
  • Focus on keeping your business outgoings to a minimum. At compareyourbusinesscosts, you can quickly and easily check to make sure you’re not paying more than you have to. Whether it’s business gas, electricity, broadband, or any other expense, don’t pay more than you need to!
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