The effect of this pandemic has been felt by most people. As we know, it’s not all been bad news. Some companies have been profitable and others have changed their way of working to not only survive but actually grow. But there are still many businesses across the country that have suffered.
The statistics tell us that the increase in corporate insolvencies comparing July 2020 to July 2021 is up from 741 to 1094, a massive increase of 48%. It is also likely that these figures will increase further as a result of both furlough ceasing at the end of September and the fact that Bounce Back Loans are now having to be repaid. These two factors alone will cause problems for many companies.
However, as with all statistics, we might not be seeing the full story. The increase in corporate insolvencies may not be as alarming as it sounds. We need to consider that July 2020 was in lockdown. Even companies that were struggling were able to stay open because of the support available. This meant the numbers were inevitably lower in 2020 than in previous years. So directly comparing the two years may not necessarily be an indication that things are bad.
Furthermore, despite the rise in corporate insolvencies, there are still 953,000 jobs available in the UK. This is over 600,000 more than in the same period in 2020. Recruitment is definitely increasing, and one of the positives that many people are feeling as we come out of this pandemic is how we’re finding different ways to work. Companies are now more open than ever to working with their staff more flexibly, perhaps changing the way that we employ people forever. This could bring with it many benefits that could make businesses stronger in the future, allowing candidates from further afield to be hired and generating a more relaxed workplace. This can only have a positive effect.
But whatever way you decide to view the current state of affairs, the fact remains that many businesses are in distress and are facing difficult decisions. There could be a number of reasons for this and, whatever is happening, companies should know that they are not alone. Whether it relates to the fact that a company is facing staff redundancies, they aren’t sure how they’re going to pay back loans, or whether they are finding it hard to pick up again after lockdown, problems are being seen in all areas and SMEs in particular seem to have been affected.
When a business is in distress it can be hard to know what to do. However, at BLB Advisory we have seen time and time again that the earlier a business asks for advice and support, the better chance they have of resolving their issues. It is rarely a case of either having to close or not, and we actively strive to keep a business open and operational wherever possible.
There are often a variety of options available that we are always keen to explore. But the truth is that the more problems are allowed to develop and the longer they aren’t dealt with, it reduces the number of options available. Therefore, as soon as a business owner or director first identifies any issues, we urge them to seek advice. Just asking a few questions and getting some professional guidance can be a great first step that can ultimately save a business. We encourage business owners and directors to be informed and gather as much information as possible, understanding the ramifications of each option, before making key decisions within their business.
BLB Advisory offers any business owner or company director an hour’s free advice on the options available to them if they find their business in a distressed position. If you would benefit from seeking professional guidance, please contact us and we will arrange a suitable time to speak with you. The earlier you speak to us, the better chance you’ll have of a positive outcome.