Secrets of prosperous companies revealed by industry analyst

A new league table from UK financial analysts Plimsoll Publishing aims to provide an answer to the question of why some companies in the label industry fail and others prosper.

One in five UK labels services companies are currently at risk of failure, while one in three are doing well. 

The equation is not as simple as strong sales equals survival. Nor is the success rate of a firm automatically affected by market conditions. Instead, it depends on the ingredients in a finely-balanced recipe that includes good margins, low borrowing, responsible management and foresight. 

Plimsoll’s new analysis of the market weighs all these ingredients and turns them into a one-page snapshot of each company’s prospects. From that, it establishes a league table based on 478 leading firms that looks like this:

• 145 companies are in a strong position, with a pre-tax margin of 10 percent
• 53 are in the good sector, on three percent margins
• 67 are rated as mediocre, on three percent
• 125 are in the ‘caution’ category, with minus one percent margins
• An alarming 88 are in the ‘danger’ range, on minus two percent

Nearly nine out of 10 UK companies currently in receivership were rated in the lowest two categories by Plimsoll in the two years before their demise. Its senior analyst David Pattison said: ‘117 of the 145 companies in the strong section are there for the second year running, proving that if you have a solid business where management is in control, you can maintain success irrespective of market conditions. The most successful firms are also largely free of debt.

‘At the other end of the scale, there is no doubt in my mind that if the pundits are right and the UK market tightens towards the end of the year, then the 88 companies in the danger category will take the brunt of the downturn.’
The Plimsoll analysis looks at the financial strength of each company based on four years’ figures.  

David Pattison continued: ‘All is not lost for those firms that find themselves at the lower end of the table. But the management needs to accept that the business has a problem and take action today, rather than next week or the week after.’

The Plimsoll analysis is aimed at busy managers who need to understand their own place in the market, as well as the likely future performance of their competitors, customers or suppliers.

Plimsoll, based in Stockton-on-Tees, is one of the leading business analysts in the UK, France and Japan. It has 16,000 customers worldwide who rely on its reports to take crucial commercial decisions.

Copies of the analysis – at a reader discount of 20 percent – can be obtained by calling Clair Sherwood on 44 (0)1642 626 422, by emailing enquiries@plimsoll.co.uk, or by visiting www.plimsoll.co.uk. Please quote discount code PR05.