Over 1,000 small firms have ceased trading in the last year, study finds
updated on 11 October 2013
Over 1,000 small and medium-sized firms (SMEs, which stands for ‘small and medium-sized enterprises’) have gone under in the last 12 months, a recently published research paper has revealed.
As reported by The Law Society Gazette, research conducted by professional services consultancy Begbies Traynor shows that the number of legal SMEs (firms with fewer than 250 employees and a turnover of less than £42 million, but not sole traders) had fallen 12% in the third quarter of 2013 when measured against the number at the same time last year. The study also reveals that the number of firms in financial distress has risen by 26% since June 2013, with researchers suggesting that this is actually a consequence of economic growth.
Julie Palmer, partner at Begbies Traynor, said: "Many SMEs run out of cash during the recovery phase [of an economy], as there is a real temptation to over-trade in order to acquire new business. With pricing pressures squeezing margins, larger players increasingly targeting smaller clients and consolidation only proving to be an option for the lucky few, we are likely to see many SMEs fall at this final hurdle."
