A study carried out by UHY Hacker Young reviewed over 150,000 business failures over the past year. We explore the reasons why these businesses failed and contemplate what this might mean for your business.
Distribution and courier companies fell top with a failure rate of 17.3 per cent - over three times the average failure rate of 5.2 per cent. Hospitality and catering, including restaurants and bars came second at 15.5 per cent. Meanwhile marketing, IT and financial services companies feature in the top ten, all falling above the average rate of failure.
Sectors with failure rates above average shared some common flaws. Issues with financial planning, poor market research, fierce competition or economic influences contributed to failure. In particular, an inability to brush off external forces such as economic shifts, tax hikes or stiff competition seem to be prevalent weaknesses.
Commenting on the findings, Business Link adviser Peter Weeks said “Building a robust business capable of shrugging off the unexpected is vital for long term survival. Keep a tight grip on your finances, and work on ways to stay competitive”.
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