31st March 2011
Strong management and cost-cutting helped reduce the number of UK business failures by 7.9% over the last year, credit management firm Equifax has found.
Equifax collated public figures for their January to February 2011 Business Failures report, which found that nearly 8 per cent fewer businesses went under than in the same period last year. The survey included businesses of all sizes, but Equifax said it was representative of how small businesses have fared over the past year.
“There are probably more small businesses practising good credit and cashflow management now than before the recession.”
said Equifax external affairs director, Neil Munroe.
“Some small firms will have had a few close shaves with customers and suppliers and that has made them more vigilant.”
“A lot of firms have taken basic cost cutting measures, like hiring and investing in new equipment — the things that have the biggest impact on cashflow. However, they need to remain cautious and make sure they check out customers and suppliers on an ongoing basis, particularly this year as we are unlikely to see growth until the end of 2011.”
Institute of Chartered Accountants in England and Wales (ICAEW) head of SME issues, Clive Lewis, said that the figures were likely to increase again as public sector cuts take hold.
“The public sector cuts have barely scratched the surface yet and the outlook for the next six to nine months is pretty bleak. Particularly in the second quarter, from April to June, we will probably see a reversal in this trend.”
“Businesses that are established and have a solid customer base and knowledge will be more likely to survive, but those small businesses that aren’t as established or didn’t set aside enough capital for ventures are going to have difficulty. For newer businesses, whatever you think the year’s figures are going to be, revisit them and think about what would happen if they are significantly poorer than you anticipate.”