ZOOM

We summarized ASIC statistics for the top 6 industries at risk of insolvency. We also summarized ASIC statistics on the main reasons for business failure. ASIC statistics also reveal the reasons for failure within and across industries.

In our last post we recommended business advisers keep a keen eye on clients in those higher risk industries. ASIC statistics allow us to ZOOM in on specifics.

In construction, which you will recall is at the higher end of the risk monitor, the reasons for failure include:

Poor strategic management

Lack of cash-flow and/or high cash use

Poor financial controls

Economic conditions

Under capitalization

Trading losses

With a good strategic and operational plan, together with regular objective advice, these reasons appear to be manageable.

Retail trade offers the same reasons for failure.  However, the order is different. So for example in construction the lead reason is poor strategic management, whilst in retail it is cash-flow and high cash use.

So generally the reasons are, by and large, the same across industries although the order may vary slightly.

Nothing good planning and advice can’t manage.

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