The start of the year is often a busy period and while many firms hit the ground running in the first quarter, there are still those that struggle to get off to a strong start. Statistics show that 4,462 companies went into administration in the first three months of 2018, up 12.6 per cent from 2017’s figures. This period is when the largest number of businesses go into administration and serves as a gentle reminder for management teams to keep a close eye on their business. They must be on top of the challenges which could impact performance in the coming year.
We continue to see certain sectors show pressure points, as factors such as Brexit, rising costs and strained trading relationships put a halt on business plans for the immediate future. This also looks set to continue until management teams have more clarity on what the UK’s relationship with the EU will look like, post-March 2019.
That said, it is encouraging to see that firms across the South East remain optimistic in the face of adversity. The latest Lloyds Bank Commercial Banking Business Barometer revealed that companies in the South East were more confident about their business prospects than any other region outside of London in January this year. With this optimism in mind, it’s time for businesses to ensure they are making the most of opportunities, whilst mitigating the challenges that may result from the difficult periods on the horizon.
The pressures that face care home facilities have increased in the last decade, especially as the UK population is not only getting bigger, but older, too. In fact, it’s estimated that those living to the age of 85 will increase by over a third by 2025, according to The Office for National Statistics. A trend that is only set to continue.
In Essex alone, almost a quarter (23.5%) of care homes are already showing signs of distress. And, this struggle is amplified as it is thought an additional 71,000 beds will be needed in the next seven years to meet demand. This is because the sector faces a £1billion funding shortfall, as revealed by a 2017 Competition and Markets Authority investigation.
For many care homes, particularly smaller facilities that don’t have economies of scale in their favour, it’s important to keep a close eye on margins and forecasts to ensure there is enough cash to meet the care needs of all residents. Healthcare, along with skilled staff wages, can be expensive and could mean homes are left in financial distress if they don’t have the funding in place to cover this.
The key to managing costs is to set and track Key Performance Indicators (KPIs), which can be developed using industry-wide guidelines. Whilst we are still in the first quarter of 2019, now is the ideal time for management teams to finalise these KPIs for the remainder of the year.
It’s also important for care home directors to monitor budgets against outgoings. Keep on top of cash flow to allow any red-flags to be spotted early on and monitor budget pipelines to manage cashflow forecasts.
The financial pressures of managing a care home can be great, so it is important to know that assistance is out there. Businesses are encouraged to get in touch with a local specialist business adviser as this is the first step to take if you think financials are starting to slide.
It’s no secret that the casual dining sector in the UK has faced tough times of late, particularly since its explosion in 2010 and subsequent oversaturation of the market.
Fast-forward nine years and increasingly cautious consumers are no longer looking for reasonably priced food and a one-size-fits-all dining experience. The sector is feeling the pinch and a recent report from CGA and AlixPartners revealed there was an average of more than 10 restaurant closures per week in 2018, up two per cent on the prior year.
Not only are Brits dining out less, they also want more unique propositions when they do so. This, paired with high business rates, are pushing a number of chains out of the market and off our high-streets.
It is key to ensure you are on top of your outgoings. Review supplier costs and menu choice regularly to ensure you get the best deals.
Another way to attract clientele is to take advantage of the shift towards online orders as consumers are drawn to convenience. The market is growing at a fast pace, with UK foodservice delivery worth a staggering £8.1billion to the economy. The shift away from delivery services catering to those only looking for ‘fast-food’ has opened doors to caterers of all cuisines.
For those outlets that aren’t already selling their meals digitally, for example on Deliveroo, Uber Eats or direct from their own website, they should consider devising an online strategy to remain competitive and get a bite of the cherry.
But with the great opportunities that online can bring, it can also be a step into the unknown. If this is the first time you are exploring digital sales, consider seeking advice on how to do this successfully and to ensure the digital platform is in good shape. And, whilst you are investing in this new sales channel, don’t let standards slip in the restaurant itself. Quality is key!
The UK’s £82billion automotive industry is integral to the economy and Essex is home to the industry’s largest research and development centre, Ford’s Dunton Technical Centre.
Despite these international centres of excellence being right on our doorstep, the sector has faced a number of challenges in recent years – in November 2018, companies across the country recorded an almost 20 per cent decline in in production. This was the biggest drop year-on-year since the recession hit over a decade ago.
And, it’s not just the manufacturers themselves struggling. This is taking its toll on the supply chain, too. With large businesses, like Honda, planning to take their manufacturing plants outside of the UK, there are huge repercussions across the sector, and businesses feeding into this industry in their locality are feeling the pinch. In the Essex automotive and logistic industries, almost 18% (17.5%) of businesses are showing signs of distress.
Economic uncertainty and lack of demand are both contributing factors to these downfalls, particularly as companies operating in the sector rely heavily on exports to drive revenue. Apprehension goes hand in hand with periods of uncertainty, but management teams should remain strong and reach overseas and into adjacent sectors to diversify their client portfolios. Relying on a wider pool of contracts will aid your cash flow in the long-term, as well as giving you access to a number of pockets of revenue from different markets across the world.
Whilst there are a number of sectors that are feeling the pressure in 2019, with some careful planning, strategic management of finances and a robust business plan, firms can take on the challenge knowing they have done everything in their power to see it through.
First published in the Essex Chronicle in February 2019.