Recent research has shown that medium sized businesses, those employing 50-500 staff, failure rate is 50% down from 0.17% of all businesses to 0.08% in the month of June compared to June last year. Again, not too much weight should be given to one months figures but it is further evidence that the insolvency rate is going against the trend predicted by insolvency practitioners. In actual fact the failure rate is significantly better than was the case in the last major recession at the beginning of the Nineties.
Building materials and building and construction were the industries that fared worst, with failure rates of 0.27% and 0.18% respectively. The North West and Scotland have also seen a worsening picture.
So how can businesses minimise the chance of failure. A few tips from KSA Group
- Be realistic. - Optimism and confidence is an important trait in successful entrepreneurs but don't think that problems will just go away when the next contract comes in.
- Know your current financial position AND likely position - Forecast ahead
- Motivate staff to keep productivity high.
- Manage cash everyday
- Be open minded and take advice.