According to research from business adviser, Tenon Recovery, hundreds of small businesses could have avoided shutting up shop in the first quarter of this year if they had heeded early warning signs.
Tenon Recovery, using its own client base for the research, found that an estimated 880 small companies folded because they did not take remedial action early enough or carry out proper forecasting.
This means that one in six insolvencies in the first quarter of 2009 could have been prevented.
Small businesses have been advised to use a “33 week window” to see if the company is salvageable – apparently a time period of 33 weeks is all that is needed to discover whether turnaround initiatives could work.
The head of Tenon Recovery, Carl Jackson, said: “Many entrepreneurs have little or no experience of operating in a recession and are not used to having to keep such a close eye on their business.”
Tenon Recovery has suggested firms establish key business indicators, carry out continuous spending reviews and frequent forecasts of cash needs as well as outsourcing specialist jobs.
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