Andrew Haslam, partner at specialist business advisory firm FRP Advisory in Newcastle, discusses the challenges facing businesses across Newcastle, and the steps that companies need to take if they’re experiencing difficulties.
This year has been a challenge for businesses across a range of sectors, with troubles on the high street, rising interest rates and political uncertainty putting pressure on firms across the UK.
The North East in particular has been affected by the ongoing difficulties, with concerns that the collapse of big name brands such as Maplin and Poundworld, and the continuing restructure of retailers, including Marks and Spencer and Homebase, will lead to a fall in footfall on the high street and across the region’s retail parks.
Statistics from the Local Data Company released earlier this year revealed four shops a week closed across the North East area in 2017, and some firms are worried that independent retailers, along with those in their supply chain, are suffering as a result of the national retail crisis.
In our experience, for companies across a range of sectors, the recent interest rate rise has also intensified the pressure on businesses, increasing the cost of borrowing and making consumers more cautious.
With this perfect storm of issues raging around them, there is a risk some business leaders batten down the hatches and try to ignore the chaos outside. But, in our experience, this will only lead to damage further down the line.
Sunshine through the storm
When macro-economic factors risk derailing the performance of a business, the firms most likely to weather the storm are those that speak up and seek help as soon as they spot an issue. The ones most at risk are those where problems, particularly trading difficulties, have been ignored and cash flow has suffered as a result.
We often find that when we are engaged by company directors they have been living hand-to-mouth for a while, running up large debts or subsidising the firm through their own means. With claims now more expensive for creditors to pursue, firms may have also been experiencing troubles for some time, leaving debts to accumulate to an unmanageable scale over time.
Working with a professional business advisor will provide a firm with an objective view of their situation, and the likelihood of being able to revive a firm is far more achievable when there is time to consider all possible options.
When every route can be evaluated, there is often the ability to develop a plan that allows the company to stabilise and build stronger foundations to prosper over time. We often find creditors are also more willing to restructure debt when approached early, as they are keen to work with a business to get some return, rather than see it collapse entirely.
As the recent Great Exhibition of the North has shown, the North East has a huge amount to offer, with companies across the region making strides in the arts, science, technology and engineering sectors. But the road to success is never easy, and some businesses may experience difficulties along the way.
Instead of burying their head in the sand it’s important that business owners face up to the issues as early as possible, and seeking support could help them to turn-the-tide and implement the steps needed to mitigate the storm.