NEWS that Liverpool’s West Tower had entered into administration came as no surprise to those who operate in the property industry.

Indeed, our latest Red Flag Alert, which charts the level of business distress, indicated that 13% of Liverpool businesses experiencing critical problems were property companies.

The state of play for the region’s construction sector was bleaker still – accounting for 30% of the total number of businesses facing critical problems.

Factors such as rising fuel costs and the lower threshold for empty rates look set to conspire against the region’s property market as we progress through 2011.

But, although the struggles of some businesses can be attributed to general market conditions, a bolt out of the blue can sometimes be what ultimately spells the end of otherwise sound and profitable companies.

An unexpected court case or costly dispute is sometimes the trigger of rapid decline.

With the Corporate Manslaughter Act now fully implemented – with potential fines running into six figures – risk assessments must remain a priority. Aside from the obvious health and safety risks, other factors should be taken into account such as reliance on a few key employees which, should they decide to leave, could leave a significant skills gap in the organisation.

Forewarned is forearmed, and scrutinising the core business model to identify potential risks and vulnerabilities would be a sensible step to take.

Diversification where possible is always a wise move, and so is ensuring that essential client relationships are not held by a single employee.

Over-reliance on one major client is not uncommon, but investing time and resources into business development initiatives – even if they are limited to obtaining extra work from an existing client base – can provide a much-needed buffer, should that major player go elsewhere.

Whether your business is feeling the squeeze or is thriving, now is the time to proactively ensure that no single event will be detrimental to your business.

Keeping a close eye on the financial health of large customers and chasing invoices as soon as they become overdue will go a long way in maintaining a healthy short-term cashflow that can accommodate any unexpected peaks and troughs.