A quarter of UK PR consultancies will cease trading or be forced to sell by the end of 2001, according to a new report.
The First Edition 2001 study on the PR industry, undertaken by Plimsoll Publishing, claims 25 per cent will either shut down through debts and loss making or be forced to sell to survive.
The survey, which covered 863 PR companies, identified four types of company strategy, said Plimsoll manager, David Pattison. 'Winners' have low debt as a percentage of sales and high growth. 'Chancers' have high debt and high growth. 'Sleepers' have low debt and low sales. Finally, 'losers' have high borrowings and below average growth.
The 98 losers analysed have levels of debt running at 14.6 per cent of average sales. The industry average is around 3.5 per cent. Such loss making strategies cannot be maintained, says Pattison.
Industry experts have countered Plimsoll's claims. 'Marketing services companies are enormously flexible. You don't need a robust balance sheet to succeed - you need a positive cash flow and the ability to make a profit,' said Jim Surguy, Results Business Consulting managing director.
'A debt is still a debt,' replied Pattison, whose company has carried out similar examinations on 460 sector industries.