While most companies think of their finances in terms of quarters and run to the ‘tax year’, there’s still something about a new calendar year that brings with it renewed hope and a desire to start achieving more. The new slate of a fresh year gives us all a chance to reflect on the past one, learn from our mistakes and knuckle down for the twelve months of the unknown ahead of us.
And while we’re well into 2018 now, it’s still worth taking a quick look in our rear view mirrors at 2017 and seeing if we can work out how to better our performance this time around.
The end part of last year saw figures emerge that make for rather worrying reading indeed. A report on financial difficulties in UK business showed that nearly half a million companies in Britain are suffering from serious financial problems.
This is really quite a sharp rise on the figures reported in 2016. A 36% increase, in fact.
2017 saw precisely 493,296 British firms reporting that they were experiencing significant and worrying financial times at the end of the fourth quarter. Not only is that a steep rise from 2016, it’s also a 10% increase on the number of companies reporting severe difficulties at the end of Q3.
120,000 of those companies were from the service sector alone, the single biggest hit industry. They’ve seen a staggering rise of 43% of companies now ‘distressed’ at their financial position.
So, what exactly is accounting for this worrying rise in financial problems for UK firms? Well, obviously, each case is different. But trends can be identified. Here are some of the most likely factors affecting the financial stability of British companies:
- Political instability concerning Brexit
- The weak pound
- Extended exchange rate weakness
- Ever rising inflation
- November’s increase in the base rate of interest
- The limiting of credit availability
The figures make for really quite stark reading indeed, we’re sure you agree.
So, what can be done? Well, while this is hardly positive news, it doesn’t necessarily spell enormous danger for British business. Or even for the companies reporting the financial problems. Certainly, these number are a bit of a red flag to the British economy. But act now and disaster can be averted.
Here are some ways we would recommend you can future-proof the rest of 2018 if you’re concerned about your financial stability:
- Analyse your figures again - Before you panic, you need to know what it is you’re panicking over exactly. A review of your books is in order. Make sure it is as accurate as possible. Then you’ll know what you’re facing in detail.
- Review your cost management - Basically, you have to batten down the hatches. Reduce your overheads as much as possible without affecting your output. Tricky, but a basic step that many companies fail to remember.
- Increased productivity - Now, obviously, this tip is easier said than done. If all businesses could just up their productivity, no one would ever suffer financial distress, would they? But if there is a way somehow, that little extra push could just see you through the hard times.
- Stay ahead of the competition - Again, this is a pretty standard business concept. If you can get your noses ahead of your rivals, that could be the difference needed to steer you to a profitable year. Maybe you should branch out or even focus on just one product or service. Perhaps you could trial an interesting - but cost effective - marketing campaign. There are lots of ways to set yourself apart.
We hope to see the numbers of organisations in monetary trouble drop this year. But if you can’t see a way out of your position, there could still be hope. Contact us if you’re worried. We may well be able to help you fight your way out of it all.