150,000 small firms at risk if their public sector contracts cease
Research published today by R3, the insolvency trade body, reveal that one in ten or 150,000 businesses in the UK face insolvency if the work they carry out for the public sector is cut as a result of cuts in public sector spending.
The reduction of the UK's structural deficit is an important objective for the Government and a wide ranging review of public sector spending is underway with the aim of making significant savings for the public purse.
The findings show that huge numbers of businesses are at risk if their contracts come to an end and small businesses are particularly vulnerable as many will find it difficult to replace the business which is lost.
It is a sobering thought that around 26,000 firms are forecast to go bust during 2010, according to the current failure rate. If just some of those 150,000 businesses at risk find that they are unable to continue, it looks like 2011 will be a record breaking year for company insolvencies, for all the wrong reasons.
The good news is that businesses can work with their creditors to reach an arrangement to deal with unpaid bills if the worst happens and major contracts are lost. This mechanism will buy a company time to rebuild its customer base and return to profitability, safe in the knowledge that creditors won't be threatening to wind up the business.
If you want to know more about how this could work for your business, call me today on 01709 331300 for a free, no-obligation chat.