CPA advise young firms on survival

THE Institute of Certified Public Accountants in Ireland (CPA) is recommending that entrepreneurs should over estimate the costs of setting up a business, and under estimate expected cash inflows to identify a realistic amount of capital required for success.

The advice is included in the CPA’s bulletin for SMEs entitled ‘Understanding the Pitfalls of Small Business’, which addresses the top 10 most common reasons for business failure and suggests ways of avoiding them.

In 2005, 313 companies went into liquidation, 14 into receivership, 61 had petitions lodged to wind up operations, while four companies appointed an examiner due to trading difficulties.

Research conducted by Experian Business Information found the underlying feature in most company liquidations was that the companies were under-capitalised.