A DECLINE in the number of Liverpool businesses facing critical problems may seem positive news, but behind the scenes a storm is brewing – fuelled by the coalition Government’s fiscal tightening measures.

Nationally, 52,000 companies in the sectors most dependent on public sector spending, including the advertising sector, are showing signs of financial distress.

Those working in Liverpool’s creative industry need to keep a close eye on their core markets and immediately revise their forecasts to take into account the proposed cuts and potential loss of public sector contracts.

Since PR and design agencies typically don’t boast much in terms of assets – brain power over stock and machinery – the banks will be less than forthcoming in lending more money to tide them over while they search for new hunting grounds.

Applications to increase even small overdraft limits are already being rejected by the banks. Outside the public sector, pressures have been felt for some time now; not least for agencies that built a niche in promoting the property and construction sectors. This is the time to take a good look at your business model and ensure it can withstand further economic gusts.

The loss of a major contract can be devastating, so while, to a degree, it is stating the obvious, reliance on one major customer should be avoided – start hedging your bets and invest in diversifying your client base.