Online retail businesses most likely to fail within one year
Insolvency practitioners Real Business Rescue have found that online retail stores were the most likely businesses to be incorporated and dissolved in 2022.
The firm analysed the 6,928 businesses which were both incorporated and dissolved in 2022, to reveal the industries where new businesses struggled the most.
Online and mail order retail businesses accounted for 421 of the companies that went out of business within a year of incorporating last year, equating to 6.1 per cent of the total.
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The letting and operating of own or leased real estate was the second hardest hit sector, with 327 businesses going to wall before completing a full year’s trading, while hairdressing and other beauty treatment businesses came in third, with 271 such businesses incorporated and dissolved in 2022.
On average, Real Business Rescue found that dissolved companies incorporated in 2022 operated for just 164 days.
London saw the highest number of businesses dissolved at less than a year old. The capital saw 1,550 dissolved in 2022, equating to one in five (22 per cent).
Birmingham was the second worst-hit area for new businesses becoming dissolved in 2022, followed by Cardiff in third, Manchester in fourth and Leicester fifth.
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“Many small businesses saw demand for their products and services fall as the economy struggled for growth and consumers reined in their spending,” Real Business Rescue national online business operations director Shaun Barton said.
“Rising inflation and soaring interest rates affected all businesses new and old and, despite introducing government support programmes, the sharp increase in energy bills has also contributed to the struggles facing businesses over the past few months.
“Now with the government scaling back support and protection for businesses in relation to their energy bills from April 2023, we expect to see corporate insolvency and liquidation rates rise considerably in the coming months. New businesses formed this year are doing so in a particularly volatile environment. With the limited support, this could put even more pressure on start-ups getting off the ground than what we saw last year.”
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