It’s currently an exciting time in Wales for new businesses. During the first quarter of 2022 more than 43,000 new businesses have been set up in Wales. Half were registered during March of this year alone, which is a staggering number of businesses - this research was taken from insolvency and restructuring company R3 in Wales.
Outperforming the rest of the UK
The figures in question show the biggest percentage change in any nation or region in the UK. The data has been taken from Creditsafe which shows the number of startup companies in Wales has gone from 372 in January this year to 2,116 in March, which means a 469% increase.
Wales has also recently seen the second highest rise in freshly entrenched firms between December 2021 and March 2022, with 385% of an increase. This only falling shortly behind West Midlands, which has seen an increase of 462%.
Low rates of insolvency
The research conducted by R3 also showed that insolvency-related activity still is quite low in Wales in comparison with other parts of the UK. Insolvency is a term that is used when a company or individual can no longer pay their financial obligations to their lenders when their debts are due. Within the first three months of 2022, there were only 266 insolvency-related activities in Wales, which was the second lowest in the UK, with Northern Ireland being the lowest with only 44.
Charlotte May, the Chair for R3 has been quoted saying: “I’m delighted to see that despite the financial impact of the pandemic, entrepreneurism in Wales continues to grow.” “The first three months of the year have seen a tidal wave of business activity and it’s inspiring to see new business owners taking the opportunity to respond to new opportunities and changing consumer demands.” Charlotte also commented: “While the number of start-ups is encouraging, we are also seeing insolvency levels in Wales slowly increase too, which given the current economic climate, is not surprising.”
Advised to seek help when needed
It’s terrible to hear that so many businesses are not able to make ends meet and pay their financial obligations when due. Of course insolvency can be caused by many factors, some which include; bad cash management, a sudden reduction in your cash inflow, or even increased numbers in expenses. Not being able to pay your bills and racking up debt is not good for business as you can imagine, and many businesses are forced to shut-up-shop and call it a day.
Charlotte May also went on to say: “Between increased creditor pressure, low consumer spending and rising inflation, this is the most difficult period for businesses since the height of the pandemic.” She also shared some advice to potential start-up owners: “Anyone thinking about setting up a new business should not be discouraged but should certainly be prepared for a challenging year. The first few months of trading are always tough and the current economic pressures will only amplify these struggles. “Business owners in Wales noticing signs of financial distress should not struggle alone. Financial difficulties don’t go away without intervention and by seeking advice from a qualified, regulated source at the earliest point there will be more options available to help resolve the issue and hopefully return the business to a healthier position.”
It is good to see so many startups popping up in Wales but sad to see so many succumb to insolvency. It is a struggle to start and maintain a business, especially now with high inflation and low consumer spending. Some businesses need a helping hand and there are resources out there to be utilised. Business Butler takes the lottery out of finding good business professionals, they have lots of friendly experts who can offer advice and help. Businesses these days need to band together and try to help each other as much as possible!
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