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Running a business in Wales

Wales at a glance

  • Economy recovered from deindustrialisation thanks to service, manufacturing and tourist industries
  • At 43% between 1999-2007, export growth was well above UK average of 26%
  • World-class telecommunications and transport infrastructure
  • Most popular business purchases are in food and other sectors that benefit from tourism, like hotels, B&Bs and caravan parks
  • Laidback, scenic and sparsely populated: antidote to London
camping

Wales suffered as much as any part of the UK from the decline of heavy industry in the 20th century.

The closure of most of the country's coalmines impoverished swathes of the country, causing mass unemployment and a slew of social problems.

Rude health

However, Great Britain's smallest country has regained its confidence in recent years.

The growth of the service industry, bolstered by a healthy tourist trade, has helped to bridge the GDP gap left by the decline of heavy industry and EU development funds have gone some way to regenerating the former mining communities that are among the poorest in Western Europe.

Welsh manufacturing is in fairly rude health. At 24% of gross value added it constitutes a larger proportion of the national economy than its English counterpart, which produces 18%.

Wales remains a significant manufacturer of electronics and automotive parts, sectors which grew rapidly in the 1980s and 1990s. Determined to protect Wales' economic backbone the Welsh government has made supporting its manufacturing industry a central plank of economic policy.

Determined to protect Wales' economic backbone the Welsh government has made supporting its manufacturing industry a central plank of economic policy

The country also has a thriving biosciences industry, hosting 250 companies, some at the cutting edge of drug development and medical equipment.

Among the companies which have set up in the principality are Amazon, Ford, GE, Toyota, Bosch and Airbus.

Exports increased by 43% between 1999 and 2007, during which time average UK growth was only 26%. The biggest exports were machinery and transport, followed by manufactured goods, fuels and chemicals.

Blighted by mass unemployment in the 1980s and 90s, Wales can now boast unemployment levels, at 4.9%, below those of London, the Midlands and Yorkshire, as well as the UK average of 5.4%.

Wales' new-found confidence is fuelled not only by its economic rebirth, but also political secession from its neighbour in 1999; sporting success, including the rugby team winning the Six Nations Grandslam, Cardiff City becoming the first Welsh team to reach the FA Cup final since 1927 and an impressive medal haul at the Beijing Olympics; and its impact in other spheres, such as music, which saw Bangor-born Duffy have the bestselling album of 2008.

Food businesses

Wales has much to recommend it to anyone yearning for a slower pace of life - London-based families or older entrepreneurs for example. A village post office might fit the bill, removing you from crowded, stressful city life and perhaps involving a government subsidy and a secure, stable income.

Richard Johns, who sells businesses for Cardiff-based property consultancy Stevens Scanlan, says that businesses selling food are popular.

"Cafés, fish and chip shops, takeaways - those are the ones that seem to always have demand," he says.

Colin Archer, a business broker for The Business Partnership in Swansea, echoes Johns' thoughts:

"Fish and chip shops are always popular in Wales, as are catering businesses, cafes, restaurants."

After "a dubious period" lasting for about "a year and a half", Johns says it's been a much better year for convenience stores as well, particularly ones taking £15k a week up."

Both Johns and Archer believe that a big part of the aforementioned businesses' attraction to entrepreneurs is the fact that they generate hard cash day in, day out.

Another contributory factor to the popularity of eateries and takeaways, perhaps, is the importance of tourist expenditure to the Welsh economy, as tourists eat out more often than locals.

"Anything to do with tourism," says Archer, attracts interest. "Caravan parks are very popular." B&Bs and hotels, too, thrive in the right areas.

 

Tourism important

Many English visit their small, but beautifully formed neighbour.

Its pristine beaches are among the best in the UK, its three national parks make it a hit with lovers of the Great Outdoors, and for history buffs there are numerous castles and museums documenting its industrial heritage.

How important is tourism to Wales?

"Depends where in Wales really," says Johns. "If you go to West Wales, such as the Pembrokeshire coast, Swansea, Gower, they rely on the tourist industry. There are opportunities there.

"West Wales is a very developed tourist route actually. A lot of Welsh people go to Pembroke and there are all sorts of adventure holidays and that sort of thing there.

"There are a quite a few B&Bs, hotels and caravan parks."

Although most visitors accept that frequent rain is the price of such verdant scenery, the soaking wet summer of 2007 did make a serious dent in tourist numbers, with total visitors falling by three-quarters of a million from 9.61m to 8.85m.

Then again, it was the wettest summer on record and coincided with a particularly strong pound, while the two years previous had been particularly good years for tourism.

And with recession looming and airline fares rising people will increasingly eschew the weekend break in continental Europe - which can only benefit Wales. In particular, with people increasingly looking to cut down costs, caravan and camping sites are well placed to benefit.

Archer says that "manufacturing businesses that employ lots of people are very popular, as they can be subsidised by the government.

"There are many local quangos, such as Finance Wales, that will help with finance, but generally for manufacturing or something that employs a lot of people."

Johns has noticed a reduction in financial support in recent years.

"They went through a phase of ploughing money into small and medium sized companies. Now that money and the free business advice seems to have dried up - not completely, but there's a lot less of it around.

With a population of just 320,000 Cardiff is smaller than Leeds and Glasgow so it certainly can't be bracketed with capitals like London, Paris and Rome. And it lacks high-value added industries such as finance, business services or research and development.

However, the Welsh capital is an accommodating home for a range of niche businesses and does have facilities worthy of a major city. It has one of Europe's most impressive stadiums in the Millennium Stadium, its largest waterfront development and the Wales Millennium Centre, which houses a national centre for the performing arts.

And, having come seventh in the top 50 European cities and Regions of the Future 2008/9 and second in the top 10 Small European Cities by Foreign Direct Investment magazine, it will surely grow in stature.

Good infrastructure

As well as citing quality of life and affordability, the magazine praised Cardiff's infrastructure, which includes road and rail links to London and the south-east, which are reachable in just two hours. The M4 motorway that leads to London is the only motorway in the country, but there are only four significant population centres - Cardiff, Swansea Newport and Wrexham - and together they're still home to fewer people than Birmingham.

North Wales is connected via the A55 expressway to Cheshire, Greater Manchester and Merseyside. Birmingham is about 1.5 hours from the Welsh border and easily accessible from either end of the country.

That means Birmingham International airport is easily accessible, likewise Heathrow, although Cardiff has its own international airport offering flights to Europe and the rest of the world. A modern freightliner terminal on the outskirts of the city provides a gateway to European and world markets.

Wales, and Cardiff in particular, boasts a world-class telecommunications infrastructure, with business broadband universally available and wi-fi networks expanding rapidly.

Cheap and cheerful

England's easterly neighbour offers entrepreneurs the best of two worlds: easy access to the financial capital of the world and the affluent South East region, but a low stress, scenic, sparsely populated environment to live and work in.

But surely this applies to many places in England's commuter belt? True - but it's also a lot cheaper in Wales.

"There a lower running costs and lower overheads," says Archer, "so anyone relocating from London, Birmingham, even the north-east and north-west, will find that for a similar turnover they'll have more in their pocket.

"Properties are generally cheaper of course," he adds - house prices are about £61.5k lower than the UK average.

Businesses are also often cheaper, making it an attractive destination for entrepreneurs on a budget.

Many would say that Wales is also a happier place to live.

"You get a friendly community," says Archer. "A better quality of life, with friendly locals."

The only drawback, he concedes, is that they "do get a lot of rain!"

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