One in four UK resellers are making a loss, according to a report compiled by business analyst Plimsoll.
It studied 1,200 UK IT resellers, and found that 309 were making a loss. It also found that 128 of those making a loss were doing so for the second or third year running.
Current economic conditions are to blame for many of those firms making a loss, claimed the report’s author David Pattison. However, he warned that those firms making a loss for the second or third years running were being poorly run and needed to re-evaluate their business practises.
"The firms that are making a loss for the second or third year running are either blatantly undercutting the rest of the market to enhance or maintain market share, or more likely have delayed making the painful decision more prudent companies have made recently," he said.
"No one wants to trim costs, lay off staff, cancel dividend payments and the like, but continuing on regardless is fast becoming unavailable. They can’t bury their heads in the sand any longer."
However, he was keen to praise those firms that had made the difficult decisions already. "I congratulate the management teams that have made the often difficult and unpopular decisions.
"They have cut their cloth according to the market conditions and as a result are more stable for it. Those failing to do so are running out of time and cash. Without a big increase in demand they cannot support their pricing strategy for much longer."