LIQUIDATOR PREDICTS FALL OF RETAIL AND CONSTRUCTION BUSINESSES
Written on the 2 August 2016
SV PARTNERS says seven major retailers and four major construction companies, all turning over in excess of $100 million annually, are facing "extreme risk of financial failure" in its August 2016 Commercial Risk Outlook Report.
The top five areas where businesses are most at risk are inner Melbourne (816, 0.8 per cent of businesses in the region), inner south west Sydney (722, 1.9 per cent of businesses in the region), Sydney City and Inner South (684, 1.0 per cent of businesses in the region), Gold Coast (652, 1.2 per cent of businesses in the region), and Parramatta (625, 1.9 per cent of businesses in the region).
SV Partners Managing Director Terry van der Velde on the construction industry:
"Inadequate cash flow, lack of strategic management and trading losses are the top three contributors to financial failure not only within the construction industry, but across businesses Australia wide," he said."It isn't all bad news for the construction industry, many businesses in the sector have a strong outlook or are still in a position to turn things around.
"To keep their financial health in check, we urge all businesses to prioritise financial issues with respect to the short term impacts on the business and adjust business plans to reflect revised projections."Finding opportunities to improve working cash flow and capital as well as stress testing budgets and finances against possible future scenarios are also key to staying in the black and managing financial risk," he said.
Van der Velde on retail:
"Unfortunately, many of these businesses will not be able to hang on for the lucrative Christmas period."It is crucial that retail businesses keep their finger on the pulse - changes in market share, price and demand need to be monitored and reacted to quickly.
"We urge businesses to look at the underlying assumptions of their business plans and projections within the context of the evolving retail space and adjust these key business tools as necessary," he said.