There needs to be better support in place for people who aren’t successful in running their own small business, an insolvency firm has claimed.
The Insolvency Service highlighted that 4,080 companies went into compulsory liquidation and creditors’ voluntary liquidations in total in England and Wales in the second quarter of 2010.
This marked an increase of 0.5% on the previous quarter and a decrease of just over 19% on the same period last year.
Peter Windatt, an insolvency practitioner with BRI Business Recovery and Insolvency, stated that, although many directors are great in their particular area of expertise, they tend to be less successful at running their own business, especially in the current tough economy.
Mr Windatt added:
“We live in a capitalistic economy. We encourage entrepreneurship. There needs to be a mechanism for those who don’t win at being in business.”
He suggested that bad management, a lack of working capital and an inability to vary overhead costs with sales are the reasons behind many small businesses facing liquidation.
Mr Windatt went on to say that although things appear to be improving, small businesses still need to be cautious as there could be more insolvencies on the horizon, with the emergence out of recession.
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