Failure rates for UK business

Courier and haulage companies are the most likely to fail in the UK and restaurants and bars are three times more likely to go bust than other UK businesses, reveals research by accountancy group UHY Hacker Young.

The study shows that 15.5 per cent of businesses in the hospitality and catering sector fail every year, compared to just 5.2 per cent for the economy as a whole, and 17.3 per cent of courier and haulage businesses go under every year. Difficulty in raising second round financing and poor market research and financial planning are to blame for the high business failure rate.

According to the firm, the hospitality and catering sector, including bars and hotels, have seen their costs rise significantly as a result of inflation-busting increases in the minimum wage and, in particular, the rising price of fuel has pushed up costs for businesses in the distribution sector.

Peter Kubik, partner at UHY Hacker Young, comments: ‘There are lots of anecdotal warnings about the failure of restaurants in their first year and they are all true.

‘As Gordon Ramsay’s and Jamie Oliver’s experience has shown, even celebrity chefs can struggle to turn success into immediate positive cashflow. For an entrepreneur who has less patient backers, it can be very tough indeed.’

According to the survey, other failure rates of businesses in the UK include:

Manufacturing – 11%
Marketing services – 8.9%
Personal services (includes hairdressers, beauticians) – 8.1%
Private hire transport – 7.5%
Retail – 6.9%
IT services – 6.3%
Financial services – 6.3%
Printing – 5.6%
Building & construction – 5%
Media & Entertainment – 2.5%
Recruitment and other professional services – 2.1%

Adam Wayland

Adam Wayland

Adam was Editor of SmallBusiness.co.uk from 2006 to 2008 and prior to that was staff writer on sister publication BusinessXL Magazine.

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