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Age of Businesses in Lancashire
2007

September 2007

Introduction

Information on the age of VAT-based enterprises is published by the (External) Office for National Statistics (ONS) . The data is taken from the Inter-Departmental Business Register (IDBR), a highly comprehensive list of businesses comprising over 2 million enterprises representing nearly 99% of UK economic activity and providing a snapshot of this register as at 16 March 2007. The age of individual businesses is calculated from a 'birth date' given in the register, a figure that is taken as the earliest registration date from either the VAT or PAYE registrations.

Lancashire statistics are summarised for local authorities in our Business Activity Area Profile and can be downloaded for middle-layer super output areas in our Data Downloads . Statistics for all other areas of the country can be downloaded directly from the (External) ONS's Neighbourhood Statistics website .

Context

Lancashire has a number of successful businesses (mainly family-owned/managed) that can trace their roots back uninterrupted for one hundred years and more (for examples of such local companies see the related article 100-Year-Old Independent Lancashire Firms on the Web . However, these are exceptional: most businesses have a much shorter life span. How long a company stays in business is influenced by many different factors. Geographic locations, the type of industry or activity it is engaged in, size and age are some predictable influences than can affect how long a business stays active. Some firms may be established to undertake a time-limited task. Unforeseen factors or "events" can also affect the survival of a business, including market influences such as the number and size of competitors and new entrants, changes in technology, as well as general macro economic conditions.

Some information is readily available in the form of business survival rates – that is, the percentage of new firms that continue to operate when they reach a given age. The majority of start-up firms do not operate for very long and generally speaking, businesses have a higher chance of closure (or de-registration) during the first three years of operation than at any other time. After this period the year-on-year number of closures steadily diminishes. In the case of Lancashire, on average about 90% of small businesses (i.e. those with a turnover that makes them liable for VAT registration) are still trading after the first year of operation. In terms of the 3-year survival rate, the measure favoured in the DBERR's "Competitive Indicators", approximately two thirds of businesses are still trading after three years, though this level is open to variation depending on the state of the wider economy. After ten years less than a third of businesses are still likely to be active (see the Research Monitor VAT-Registered Businesses, Sub-Regional Survival Rates .

Anecdotal evidence suggests that failure rates in the first few years are usually much higher for micro-enterprises (those with turnover below the VAT threshold level) than for other smaller businesses and that after 3 years, the survival rates of micro-enterprises continue to be well below those of other small firms. The likelihood that micro-enterprises require less investment could induce these firms to take more risks which may explain the higher probability of exit.

Lancashire Perspective

The distribution of the Lancashire VAT-based enterprises by broad age band is shown below in Tables 1 and 2. The scale of business stock churn over the past decade is illustrated by the fact that no less than 54.5% of the Lancashire sub-region's businesses are under 10 years of age. This is marginally lower than the equivalent proportion both in England and Wales (55.0%) and across the wider North West Region (56.9%). Conversely, the sub-region has a rather higher share of its business stock in the 10 or more years age category (45.5%). The difference with England and Wales of 2.6 percentage points percentage points is not large numerically but nonetheless represents a significant characteristic. In large part this structural element is probably a reflection of the rather below par pace of business formation that Lancashire has experienced over the period allied with the continued presence of a number of mature industrial sectors with above average numbers of older companies.

Bar chart showing the distribution of the ages of VAT-registered businesses for Lancashire and its local authorities in 2007 - see text for details Source ONS - UK Business: Activity, Size and Location

Viewed by district (Figure 1) the highest shares of the youngest businesses (under ten years of age) are to be found in the Central Lancashire districts of Chorley (42.9%), Preston (42.5%) and South Ribble (42.7%) and the lowest shares in Lancaster, West Lancashire and Wyre. Blackburn with Darwen and Blackpool have the highest proportion of businesses aged less than two years and Lancaster the lowest share. As might be expected, the general age distribution of businesses between districts appears to be fairly closely correlated with the pattern of business formation rates and survival rates experienced over the past decade (see Tables 5 and 6 below) but structural factors in the form of the local industrial mix also seems to be an influencing element. For example, the agricultural sector has a very low business churn rate having both exceptionally low rates of new business formation and very high rates of business survival. In districts with above-average shares of agricultural businesses the statistical effect is to increase the apparent average age of the business stock. This is particularly apparent in such districts as West Lancashire and Wyre. Conversely, the business churn rate tends to be well above average in the hotels and restaurants sector and districts (e.g. Blackpool) that have a higher dependency on this sector will tend to have a slightly younger business stock in consequence.

Data on VAT-business age bands has also been published for middle-layer super output areas (see Table 3 and Figures 2 and 3). The distribution follows a fairly predictable pattern with the youngest businesses (aged under four years) proportionally best represented within and around the periphery of the larger urban settlements, in part reflecting those areas which have experienced the highest business formation rates over recent years but also the presence of newer industrial and employment areas, particularly those at or near major motorway junctions. With the exception of a handful of older urban industrial areas, businesses aged 10 years or more are proportionally most concentrated within the rural areas, presumably reflecting the presence of agricultural businesses.

Map showing the percentage of businesses that are less than four years old for each of Lancashire's middle-layer super output areas in 2007 - see text for details Source ONS - UK Business: Activity, Size and Location
Figure 3 VAT-Based Enterprises 10 or More Years Old, 2007

Map showing the percentage of businesses that are 10 or more years old for each of Lancashire's middle-layer super output areas in 2007 - see text for details Source ONS - UK Business: Activity, Size and Location
Table 5 Local Authority Districts - Business Formation Rates
 
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Average
1994-2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North Lancashire
8.83
8.19
8.36
9.80
9.73
9.14
8.62
9.39
9.38
10.55
10.17
8.65
9.23
Blackpool
8.26
8.40
10.61
10.91
10.35
10.76
10.18
9.88
10.31
11.64
12.01
9.78
10.26
Fylde
11.16
9.49
8.85
9.89
10.69
9.83
9.98
9.96
8.52
11.26
10.70
9.68
10.00
Lancaster
8.68
7.24
7.04
9.86
8.27
8.68
7.23
9.50
9.63
10.65
9.09
7.55
8.62
Wyre
7.94
8.03
7.15
8.58
9.93
7.56
7.54
8.37
8.90
8.95
9.26
8.06
8.36
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Central Lancashire
9.44
10.04
10.28
10.89
10.54
9.38
10.02
9.17
9.59
10.65
10.00
9.11
9.93
Chorley
10.04
10.45
9.98
10.30
11.01
10.99
10.58
9.00
10.00
11.98
10.71
9.83
10.41
Preston
10.54
10.16
11.44
13.06
11.46
11.08
10.66
10.13
10.03
10.93
10.85
8.94
10.77
South Ribble
9.22
9.63
11.57
11.27
11.76
10.10
10.45
8.78
10.11
11.09
9.82
8.98
10.23
West Lancashire
7.90
9.89
8.25
8.61
8.07
9.23
8.45
8.52
8.27
8.77
8.54
8.76
8.61
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancashire West
9.13
9.11
9.33
10.36
10.14
9.77
9.35
9.27
9.49
10.60
10.08
8.89
9.63
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East Lancashire
9.70
8.96
9.78
9.60
10.15
9.69
10.65
10.24
10.57
7.89
10.37
10.18
9.82
Blackburn with Darwen
10.50
10.40
10.98
11.15
11.28
10.23
12.48
11.40
11.35
12.86
11.18
11.27
11.26
Burnley
10.35
8.89
11.34
10.29
11.04
10.98
11.28
11.54
12.14
14.57
11.72
10.29
11.20
Hyndburn
10.14
8.89
9.28
9.23
10.21
9.23
10.88
10.95
10.43
10.57
11.33
10.67
10.15
Pendle
9.38
8.35
8.60
8.00
8.35
9.11
10.74
10.23
9.63
10.59
8.43
8.39
9.15
Ribble Valley
7.40
6.74
8.92
8.62
8.72
8.83
7.59
8.37
10.40
11.57
8.43
8.82
8.70
Rossendale
10.38
10.10
9.28
9.84
11.20
9.76
10.61
8.88
9.26
11.02
11.63
11.68
10.30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancashire County
9.33
8.97
9.21
9.90
10.01
9.57
9.51
9.40
9.68
10.82
9.92
9.13
9.62
Lancashire NUTS-2
9.33
9.04
9.48
10.11
10.15
9.70
9.79
9.59
9.87
11.06
10.18
9.35
9.80
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North West
10.13
9.94
10.12
11.13
10.89
10.34
10.42
9.93
10.41
11.31
10.56
10.08
10.44
United Kingdom
10.29
10.02
10.28
11.20
10.93
10.38
10.34
9.70
10.01
10.73
10.17
9.73
10.32
Note Annual registrations as a % of the stock at the beginning of the year
Source Small Business Service - VAT Registrations and De-Registrations, 1994-2004
Table 6 Local Authority Districts - Business Survival Rates
 
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Average
1994-2004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North Lancashire
88.99
89.24
90.17
91.43
91.01
91.42
90.48
90.61
91.44
90.65
91.23
92.35
90.75
Blackpool
86.49
87.16
88.23
89.77
88.81
89.92
87.98
89.27
90.91
88.01
89.71
90.39
88.89
Fylde
89.96
90.29
89.60
91.01
91.54
90.83
90.24
89.18
90.39
89.85
91.05
91.83
90.48
Lancaster
90.57
89.29
91.24
92.05
92.36
92.09
91.54
90.81
92.55
93.15
91.94
92.89
91.71
Wyre
89.25
90.53
91.38
92.74
91.37
92.60
91.97
92.75
92.37
91.05
91.99
93.95
91.83
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Central Lancashire
90.05
89.66
90.86
90.83
91.49
91.49
91.89
89.78
90.45
90.69
91.28
91.62
90.84
Chorley
89.59
88.43
90.77
91.76
90.83
91.17
91.36
89.79
91.05
90.28
91.16
92.67
90.74
Preston
90.46
89.84
90.25
88.75
90.72
90.52
90.66
88.31
89.05
89.87
89.81
90.01
89.85
South Ribble
88.58
89.55
91.12
91.15
91.37
92.00
93.47
90.50
90.79
90.70
91.93
92.23
91.12
West Lancashire
91.15
90.59
91.43
92.19
93.04
92.49
92.47
90.87
91.27
92.00
92.53
91.99
91.84
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancashire West
89.51
89.45
90.52
91.13
91.26
91.46
91.21
90.17
90.92
90.67
91.26
91.97
90.79
 
 
 
 
 
 
 
 
 
 
 
 
 
 
East Lancashire
88.83
88.12
89.66
90.36
90.49
90.31
91.13
90.66
90.90
90.35
91.16
91.91
90.32
Blackburn with Darwen
87.40
87.46
88.85
90.54
89.22
88.94
89.85
89.09
89.47
89.23
89.45
90.30
89.15
Burnley
87.74
86.39
87.79
88.24
89.55
89.02
89.02
90.53
89.02
90.57
91.55
91.56
89.25
Hyndburn
88.49
86.94
88.12
89.58
90.69
89.58
91.54
91.12
91.01
90.00
89.80
92.13
89.92
Pendle
89.73
88.49
90.23
90.59
91.17
91.61
91.89
90.93
92.20
90.77
92.02
92.94
91.05
Ribble Valley
92.38
91.46
91.99
92.74
92.62
92.94
93.49
92.70
92.36
91.32
93.98
92.75
92.56
Rossendale
87.34
87.56
90.72
89.63
89.87
89.71
90.98
90.08
91.53
90.55
90.18
92.39
90.05
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancashire County
89.76
89.32
90.54
91.02
91.36
91.38
91.62
90.57
91.14
90.94
91.52
92.27
90.95
Lancashire NUTS-2
89.27
88.98
90.20
90.87
90.97
91.07
91.18
90.33
90.91
90.57
91.21
91.95
90.63
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North West
88.75
89.14
90.02
90.19
90.34
90.58
90.37
90.66
90.28
90.51
90.86
91.78
90.29
United Kingdom
89.29
90.01
90.66
91.05
91.26
91.18
91.00
91.11
90.81
90.71
90.96
91.63
90.81
Note Stock at the beginning of the year less de-registrations over the year, expressed as a percentage of the beginning-of-year stock
Source Small Business Service - VAT Registrations and De-Registrations, 1994-2004

This page was compiled by Peter Kivell .

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