Blame the market, the government, intense competition, or even bad luck. Whatever the reason, the fact is access control companies do fail!
That’s according to a new report by financial analysts Plimsoll Publishing. The researchers offer reasons why one in four UK access control companies are failing, while one in three prosper.
The analysis has looked at the industry’s top 261 UK companies and placed each of them into one of five financial ratings. The ratings are based on an assessment of the overall financial strength of the company plotted over a four-year period.
For the 84 companies listed in the "strong" section, the analysis is quite an accolade, according to the research. These companies are simply well managed, averaging glamorous 8pc margins and delivering these largely debt free. Indeed 45 of these companies are now in the "strong" section for the second year. They prove that once you have a solid business where management is in control, you can maintain this success irrespective of market conditions.
As for the 70 companies listed in the "danger" section of the analysis, of which 37 are new entrants, their immediate reaction might be somewhat different, Plimsoll say. Many of these companies are hampered by a combination of high debts and low margins. On average these companies make only -3 margins and carry four times the debts of the average "strong" company. They are certainly most vulnerable to financial collapse, it is claimed.
What they say
David Pattison Senior Analyst at Plimsoll says: “Very often it’s a question of the management initially accepting that the business has a problem. They must then take action today, rather than next week or the week after." There is no doubt that the likelihood of a company failing increases as its financial rating deteriorates, it is claimed. Some 84pc of UK companies currently in receivership were rated "Caution" or "Danger" up to two years prior to their demise.
Pattison adds: “If the pundits are right and the UK market tightens towards the end of the year, then there is no doubt in my mind that the 70 companies already in the Danger section of the analysis will take the brunt of this downturn."
The analysis is aimed, Plimsoll say, at managers that need to apply this kind of detailed analysis to their daily thinking, understanding where the market is going and how the financial standing of their competitors, customers or suppliers will affect their own business in 2005 and beyond.
Copies of the 261 company, 415-page analysis are available in paper and CD versions (£305 and £499 plus vat respectively). Call Plimsoll Publishing on 01642 626400. Readers of Professional Security can receive a five per cent discount.
