Plimsoll, the world’s leading predictor of corporate failure, has warned that up to 1 in 3 UK businesses could be in financial jeopardy in 2024.
With the Insolvency Service already reporting that corporate failure rates are at levels not seen since the depths of the financial crisis in 2008, Plimsoll is offering an opportunity to see who the next failures are likely to be in more than 1600 different markets.
Plimsoll’s proven model identifies strengths and weaknesses in the performance of any company, large or small. More importantly, it provides early warning to companies, across any market or sector, that their current performance is leading them towards ultimate failure.
Launched in 1987, the Plimsoll Model has proven to be an accurate predictor of company failure. 9 out of 10 previously failed businesses were rated as “Danger” by Plimsoll up to 2 years prior to their ultimate demise. Heeding Plimsoll’s early warning can be the difference between failure and survival.
Plimsoll applies this model to almost half a million British companies in more than 1600 individual industry studies. Based on this comprehensive coverage of the UK economy, Plimsoll has issued its warning that 1 in 3 British businesses need to make immediate changes to their business model.
Such a rating provides early warning that changes need to be made immediately. An injection of shareholder capital or sharp improvements in efficiency is needed to arrest their slide or they WILL fail. Further degradation of economic conditions will merely expedite the process it is just a question of when.
As with any period of economic turbulence, good companies survive whereas, those that entered the downturn in a weak state are those that fail. That has rang true throughout history. Who in your market is most vulnerable to continued economic uncertainty? Plimsoll provides some key analysis of where elements of weakness or strength exist in the UK economy. It also shows whether the picture is improving or in decline:
Year-on-year comparison of companies rated Danger
% of companies in Danger in the latest year 36%
% of companies in Danger in the previous year 34%
There has been a significant rise in the percentage of British businesses that are rated as "Danger" by Plimsoll. This increasingly reflects the economic reality Britain emerged into after the pandemic. One of geopolitical uncertainty, new trade barriers as a result of Brexit and rampant input cost inflation.
Year-on-year comparison of companies rated Strong
Conversely, the percentage of companies proving financially solid has remained impressively stable. Companies rated as “Strong” by Plimsoll has remained rooted at 48% of all British business as shown below:
% of companies rated as Strong in the latest year 48%
% of companies rated as Strong in the previous year 48%
Performance by the size of the company
The variance in companies rated as Danger by Plimsoll based on size is perhaps the largest shock as we emerged into a new, post-pandemic, post Brexit economic reality.
Larger companies are the most likely to be financially compromised and at risk of recessionary pressures. Is this why major companies from tech giants to car manufacturers are shedding jobs in 2023?
Overall assets size % in Danger
Less than £1m Assets 27%
£1 - 5m Assets 20%
£5 - 10m Assets 21%
£10 - 50m Assets 25%
Over £50m Assets 41%
Further down the economic hierarchy, SMEs appear to be much more stable than their multinational peers. The small business revolution looks set to continue for the foreseeable future. Of course, the retailer, the independent coffee shop, the small wine wholesaler may argue differently. Smaller businesses, reliant on consumer footfall, are at the sharp end of the cost of living crisis, the cessation of cheap labour, soaring input costs and ruinous business taxation rates. However, that doesn’t remain true for much of the rest of the start-up economy.
Plimsoll produces individual studies on more than 1600 different markets and hundreds of international industries. If you want to know which of your competitors are heading into 2024 at the highest risk of failure, Plimsoll can tell you in mere minutes. We believe that no corporate failure should come as a shock. The signs are there years in advance.
At Plimsoll, we believe this type of foresight should be available to all forward-thinking business leaders. Each industry-specific Plimsoll Analysis provides a Plimsoll Model on EVERY leading company within that market. Within minutes you will be able to see instantly:
- The companies that are in financial danger
- Those getting it right and setting the benchmark to follow
- The companies that are ripe for takeover
- The over traders chasing growth at all costs
- Where your own company sits among them all
A Plimsoll Analysis is the only tool you need to better understand your competition, your market and your own place within it. To find out more, visit www.plimsoll.co.uk