As the financial year draws to a close in April, businesses should take the time to reflect on their achievements, challenges, and strategic pathways for future success. In the UK, 2024 has been marked by political and economic shifts, including ongoing discussions around business regulation, fiscal policies, and Government interventions aimed at stabilising and ultimately growing the economy. It is fair to say that businesses have had a great deal to contend with.

Encouragingly, official figures by The Insolvency Service indicate that company failures actually fell in 2024 compared to 2023, with a reported 5% decline in total insolvencies. This might suggest that businesses are becoming more financially resilient, aided by improved access to restructuring advice, a greater take up of Government support schemes, and an increased focus on proactive risk management.

Challenges ahead call for seeking professional advice

While fewer businesses are reported to have failed, that doesn't mean that those which remain aren't still facing significant challenge - especially those in the retail, hospitality, and leisure sectors.

According to Colliers, the Government's decision to cut business rates relief for these industries from 75% to 40% from 1 April 2025 could result in rates bills rising by 140% or more for thousands of shops, restaurants, pubs, gyms, and nightclubs. This move will reverse some of the financial relief measures introduced by the previous government in November 2022, which aimed to cushion businesses struggling with higher rates bills.

The reduction in relief, announced by the new Chancellor in her Autumn Statement last year, could significantly impact businesses that are already contending with rising national insurance contributions and an increased national minimum wage.

In terms of specifics, Colliers predict that retailers currently benefiting from business rates relief will see their rates bills surge from an average of £3,751 a year to £9,003, while restaurants will see an increase from £5,563 to around £13,351 annually. Pubs are also set to be affected, with their rates bills expected to climb from £4,017 to £9,642 per year. These cost increases, combined with broader economic pressures, may prove unsustainable for many businesses, leading to further closures. Indeed, the Centre for Retail Research predicts that store closures in 2025 could reach as high as 17,349, surpassing previous years - from 13,479 in 2024 - a 29% rise, with an increase in business rates cited as a key contributor.

The government's proposed initiatives to grow the economy include increased funding for small and medium-sized enterprises (SMEs), streamlined regulatory frameworks to reduce administrative burdens, and enhanced access to financial aid for struggling businesses. These measures aim to help companies manage cash flow, invest in sustainable growth, and strengthen resilience against economic shocks. They are intended to give these businesses a stronger foundation for long-term financial health.

Sectors such as retail, hospitality, and financial services have already shown signs of improvement. Many have successfully navigated financial difficulties through early intervention and restructuring strategies, which have allowed companies to avoid insolvency. A more stable business environment is achievable, but it relies on various factors, not least the timely intervention of restructuring professionals in helping businesses, employees, and stakeholders find viable solutions to longer-term prosperity.

Business restructuring across sectors

Looking back over 2024, economic uncertainty, inflationary pressures, and shifting regulatory landscapes tested organisations of all kinds.

In the retail industry, businesses have faced mounting debts and supply chain disruptions, necessitating innovative approaches to restructuring. By implementing structured liquidation strategies, enhancing communication with stakeholders, and leveraging asset realisation techniques, struggling companies have been able to minimise losses and achieve fair resolutions for creditors. The ability to manage an efficient restructuring process while mitigating potential disruptions has been instrumental in maintaining industry resilience.

Beyond the corporate world, charitable and not-for-profit organisations have also had to navigate financial difficulties, such as when PKF Littlejohn Advisory's Insolvency Practitioners were appointed as Joint Liquidators of British Youth Council (BYC).

Many organisations in this sector have encountered funding shortfalls and governance challenges, requiring expert intervention to preserve their missions and ensure operational continuity. By working closely with these organisations, restructuring professionals have helped them adapt to new financial realities, maintain key services, and comply with sector-specific governance requirements. Cases such as BYC highlight the importance of sector-specific and case-specific expertise in delivering sustainable restructuring solutions.

Lessons from 2024 and strengthening businesses for the future

The success of restructuring efforts in 2024 underscores key lessons for businesses confronting financial challenges. Early engagement with restructuring professionals leads to better outcomes. Put another way, addressing distress early secures more favourable resolutions. Transparent stakeholder communication fosters trust, while tailored, sector-specific strategies have proven to be more effective than generic solutions. Skilled insolvency practitioners play a crucial role throughout the process, ensuring compliance, efficiency, and optimal recoveries, when all else fails.

Looking ahead to 2025, businesses must remain vigilant and continue to build on these positive developments to bolster their financial resilience and seize new opportunities. Businesses must continue to evaluate their risk management strategies, especially with evolving market conditions.

Seeking professional advice remains a key step for organisations across all sectors, to ensure they are prepared to navigate economic uncertainties and secure their future growth.

For further information please visit PKF Littlejohn Advisory