The government recently published statistics on insolvency from 2017 showing the rate of insolvencies by location, business size and age. The statistics reveal how these three factors can influence the risk of insolvency for businesses in the UK and should act as a warning for businesses not to get too complacent even when they have passed the treacherous start-up phase.
Location was shown to be a major factor in the survival prospects of a business in 2017 with rates not surprisingly highest in the North of England which still has a long way to go to catch up with the south. Yorkshire and Humber fared worst with 129 insolvencies per 10,000 enterprises, which was well above the average of 81 for England and Wales.
When it comes to company size it is businesses turning over between £500,000 and 1 million a year that saw the higher rates of insolvency. This may come as a surprise considering these businesses will be established and employing between 20 and 49 people. According to analysts, insolvencies in this sector were largely down to companies over stretching themselves or failing to deal with the extra financial pressures growth sometimes brings.
The age of companies is largely reflective of the size a company has grown to within a period of 4 to 9 years. This is a critical period when businesses are expanding and taking on more staff. It is also a period where greater strategic demands are being place on directors. This can only increase the risk of business failure if directors are inexperienced or unable to cope with the demands of running a larger business.