League table from financial analyst Plimsoll aims to provide an answer to that age-old question in the scientific and laboratory equipment market: why do some companies fail and others prosper?
One in seven UK scientific and laboratory equipment services companies are currently at risk of failure, while one in two are doing well, says Plimsoll.
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 unique one-page snapshot of each company's prospects.
From that, it establishes a league table based on 717 leading firms that looks like this: 327 companies are in a strong position, with a pre-tax margin of 10%.
65 are in the good sector, on 4% margins.
114 are rated as mediocre, on 3%.
105 are in the caution category, with -1% margins.
An alarming 106 are in the danger range, on -6%.
Nearly nine out of ten 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 says: "262 of the 327 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 106 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.
Said David Pattison: "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.
Laboratorytalk readers can claim a discount of 20% on the report by quoting discount code PR05.
