Insolvencies not yet filtering into the economy, but this is what businesses must do to future-proof
Liam Short March 17th 2026
Businesses are still coming to grips with increased costs deriving from the increase in National Insurance contributions for employers, the end of business rate relief for Retail, Hospitality and Leisure (“RHL”) at the end of March, and increases to the national minimum wage from 1 April. Transitional caps will initially soften the blow, and we are not yet seeing a considerable rise in insolvencies — the number of insolvencies in England and Wales in February was actually 7% lower than the same month in 2025. However, as household belts are tightened, the RHL sector may just be the canary in the coalmine, as the first to face a drop in consumer demand.
The eagle-eyed might look to the recent administration of BrewDog as a case example. What was anticipated as a buy-out, became an insolvency pre-pack. BrewDog itself is a curious example and its dominant former management will have played a key role in what appears to be an inflated market price, even prior to the introduction of Private Equity’s clipboards and calculators. Yet what is telling from the deal is what was left behind, namely 38 bars and the redundancy of 484 members of staff. Branding and brewing has been rescued, but not the retail and hospitality undertaking.
On top of existing, systemic issues for the sector, businesses now face the threat of increased energy costs due to the conflict in the Middle East. Given this, what can business owners do to limit the impact of price changes?
- Know your burn rate You cannot fix what you have not measured. Calculate your energy-to-cost ratio immediately, so you know exactly how different energy rate rises will affect your underlying business.
- Tighten the cash cycle Survival depends on the speed of your cash flow. Shorten your invoicing cycles and try to extend time to pay. A "volatility fund" is a necessity.
- Shorten the distance High fuel prices are a signal to larger entities to localise. Audit your logistics for "empty miles" and seek to reduce them by identifying better placed suppliers.
- The "no-surprises" pricing rule Use a "drip" approach to price increases for your customers. Incremental shifts are much easier for a loyal customer base to accept, rather than a blanket or significant hike.
- Understand your customer As the purchasing power of customers declines, consider changing your offering. If demand for luxury and high-end is in decline, so should its offering.
