Glimmer of hope for small business success rates

In the last three months, the number of business failures fell by 4.1% compared to the same period in 2005.

The findings were most optimistic for the engineering sector, which saw a 32.5% decline in businesses being forced to close, textiles and clothing dropped 34.6% and post and telecommunications fell 27.9%.

Regionally, businesses in the City of London benefited from a 22.9% decrease in failure rates. The North East performed best, with a 50% decrease.

However, these figures exist against a backdrop of increasing failure rates, as 2006 has still seen more overall business failures in the first nine months of the year compared to the same period in 2005.

Many sectors are still struggling, with business closures in the hiring and leasing sector increasing by 95.5%. Food retailing and building material also saw increases of 88.9% and 157% respectively.

Even including the last three months, the patterns of business failures throughout the year to date are bleak. Only 10 sectors have seen a fall in firms being forced to close, while an increase has been seen in 23 sectors.

Richard Lloyd, managing director of Experian’s Business Information division, said: “The improvement in failure rates is well and truly welcomed and it provides an indication that things are picking up.

“However, when you look at the bigger picture, it is not as clear-cut. This illustrates that a very mixed picture is emerging and until the end of the year we won’t know for certain which way the business failure pendulum will swing.”

© Crimson Business Ltd. 2006