In January 2014 R3 released a business distress index which has highlighted positive figures in UK business growth for 2014. It states that 63% of UK businesses are showing at least one key indicator of growth which suggests that the recovery is bedding in and gaining ground.
There are 5 key indicators of business growth
– Investment in equipment
– Increased sales volume
– Business expansion
– Increased profits
– Growing market shares
By businesses showing positive signs on the above list, it should be the beginning of businesses increasing in confidence which will hopefully aid in their longevity
It needs to be noted however that 37% of businesses are still showing signs of distress. While this means a third of businesses may still be struggling, it is not something to panic over. Carefully and proactively looking after these businesses is the best way to proceed. Keeping a close eye on their management accounts, cash flow forecast and balance sheet is something that bookkeepers, accountants and directors themselves should be concentrating on while signs of distress are still visible.
Some key indicators to look out for within distressed businesses are:
– Creditors being more confident in pursuing their debts
– Under Investment during recession may cause for concern.
– Increase demand on products and goods can put pressure on a company’s cash flow, supply chains and business models
If businesses are prepared to fight through their struggles then their professional advisors should be prepared to support and encourage them with useful information and help along the way.