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2006 saw increase in business start-up failures

Published On 2 February 2007 at 17:38:25

Last year saw a significant rise in the number of start-up businesses that failed, says new research.

Figures from advisory outfit Deloitte show that the number of British firms forced in to administration rose by 26 per cent during 2006.

Business support and recruitment services had a particularly rough time of it, with a 90 per cent increase in administration cases, while the leisure and hospitality, and the financial services sectors all saw a 50 per cent rise.

Neville Kahn, a reorganisation services partner with Deloitte, said: "In the financial and recruitment sectors we have seen an increased regulatory burden and in hospitality and leisure - a typically high cost environment - we have seen businesses punished by their thin margins when volatility occurs."

Another partner at the company, Lee Manning, added that the current climate is particularly tough for small businesses in the financial advisory game.

"The costs associated with running an independent financial advisory business …have increased significantly in recent years making it more difficult for the smaller businesses to absorb these costs," he said.

The midlands was worst affected last year, with a 60 per cent rise in administrations.

 

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