89% of these companies have failed

Did you know that only 53 companies have been on the Fortune 500 list since it was established in 1955?

That means that 89% of the largest companies in 1955 have gone bankrupt…

Merged…

Been acquired by another firm…

Or perhaps they still exist, but have shrunk to the point where they’re no longer on the list.

What’s more, this trend is accelerating.

Unlike the Fortune 500 list, the S&P index includes only publicly traded firms. In 1965, corporations stayed on this list for an average of 33 years. By 1990, that was just 20 years. And it’s forecast to narrow even further to 14 years by 2026.

That means that at current rates, about half of the firms which are on the S&P index today will be replaced by 2032.

I find these statistics astonishing.

And there’s one thing we must learn from them…

No company is too big to fail.

You need to take this to heart because right now, the economic environment is extremely volatile.

Not only are we emerging from the pandemic, but the war in Ukraine and the sanctions on Russia have disrupted supply chains, impacted the price of staples like energy, fertilisers and wheat and created enormous uncertainty.

Interest rates, taxes and inflation were already on the rise. Labour in many industries is increasingly scarce and expensive.

And this is on top of the changes we’ve already seen in many industries due to disruptive technological innovation.

In this environment, company failures are inevitable – as I’ve mentioned several times in my recent emails!

The problem is, if you’re doing well right now, you might naturally assume that you’re immune to significant troubles.

It might feel like “failure” is something that happens to other companies – so you don’t worry about it too much.

I wonder whether the leaders of Pan-Am, Polaroid, Toys ‘R’ Us, Tower Records, Compaq, Kodak and hundreds of others felt the same before they disappeared into oblivion…

(And those are just the names you might recognise. How about Detroit Steel, Brown Shoe, Collins Radio, Zenith Electronics, National Sugar Refining, all of which were titans in their time?)

Now, I’m not suggesting that your company faces any kind of imminent catastrophe.

But responsible business leaders are always very focused on risk.

They think systematically about the strategic threats they face, and what they might do if these threats ever materialise.

They never take their success or their survival for granted.

When we manage your company’s finances, mapping out the key risks you face and putting together a plan to mitigate them is part of the work we do together.

You see, we’re here to help you grow faster and maximise your profitability. But in order to thrive financially, it’s not enough to have an ambitious plan for growth (which is where most companies put their energy).

You must also consider and where possible, pre-empt the things that can go wrong…

In fact, in this unstable economic environment, it’s one of the most important things you can do for your future!

It’s not the kind of service you receive from a standard accountant. But it’s the kind of work that corporates take for granted. And if you’re turning over £1-£10 million, it’s part-and-parcel of the world-class financial management you receive with us, too.

To find out more, get in touch with me today. Email or call us on 01279 647 447, and let’s talk about how we can help you.

Warmly

Garry.

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In this blog archive our Managing Director, Garry Mumford simplifies all things financial and shares with us a lifetime of practical financial business advice.

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