‘Worrying’ report shows increase in financial distress among Yorkshire’s small businesses
Almost all sectors in Yorkshire’s economy are experiencing an increase in financial distress, according to the latest research from independent business recovery practice Begbies Traynor.
The research also reveals the same trend for the UK as a whole, with small businesses feeling the most strain.
The quarterly Red Flag Alert, which monitors the financial health of UK companies, reports that by the end of Q1 of this year, a total of 18,428 Yorkshire businesses were displaying signs of ‘significant’ financial distress.
17,310 (96%) of them were SMEs, which was an increase of 1,189 in the three months since the end of 2016. In total, business distress in Yorkshire rose by 9% year on year (against a UK annual increase of 8%).
Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Small businesses are the lifeblood of the UK’s economy, accounting for 60% of all employment in the private sector and almost 50% of private sector turnover, so it is particularly worrying that the numbers of SMEs suffering financial distress are on the rise.
“Robust management structures and business experience are essential to avoid small businesses becoming vulnerable to economic fluctuations and uncertainties but all too often these basics are not put in place.”
He added: “The Government’s recent requirement for large businesses to make public information relating to the amount of time they take to pay suppliers is a welcome development but small business owners should ensure they do not wait until it’s too late before seeking advice that could resolve financial problems and help secure their company’s future.”
Sectors in Yorkshire that were hard hit by the rising levels of business distress included industrial transportation and haulage firms, which saw a 55% increase in ‘significant’ distress year on year, up from 368 businesses in Q1 2016 to 570 businesses in Q1 2017.
Yorkshire companies in the leisure and cultural sector, as well as tourism and travel, hotels and accommodation, and media, also saw increases in distress of between 12% and 16% compared with the first quarter of 2016.