As we approach the end of Q1 2018, many will be reflecting on what has been a challenging start to the year.
There has been a significant number of job loss announcements across GB and NI, with the manufacturing, construction and retail sectors being particularly badly affected.
Household names, both locally and nationally, have entered insolvency processes and, whilst the true financial impact on their supply chains is, at this stage, unknown, it is likely to be significant.
It is a little early to carry out the post-mortem and conclude on the exact reasons why these businesses failed. Businesses rarely fail for one reason alone; there is usually a combination of both micro and macro-economic factors. Changing consumer and technological trends, together with decisions that, with the benefit of hindsight, management may have made differently, may also play a part.
Locally, many of the recent jobs lost were highly skilled, and replacement work in the same sectors may not be readily available. Support may be necessary to facilitate retraining, and there may be a concern that the lack of a functioning devolved government in Northern Ireland will be detrimental to the prospects of suitable, timely assistance.
Another factor, looming increasingly large, in the background is Brexit. The date, 29 March 2019, should be at the forefront of every business person's mind. What Brexit is going to look like for NI and its full potential impact on businesses here is still largely unknown.
However, it isn’t all doom and gloom. Business failures can often create opportunities for others to build sustainable businesses going forward.
For businesses that are not in critical danger, but are beginning to witness a drop in financial performance, there is an opportunity for these businesses to review and consider if their business model is right to secure their medium to long term future. To ensure this, businesses need to remain agile and alert to change, adapting their business model as necessary.
This could range from refocusing on their core business i.e. phasing out a loss making division, to better management of the working capital cycle, seeking an alternative structure of finance e.g. invoice or trade financing, or seeking to de-risk through hedging foreign exchange etc.
There are a lot of negatives above, but we must remember that NI businesses have been through even tougher times before, and have survived and flourished. If businesses are put on the correct footing now, they can grow to become household names in the decades to come.