COMPANIES in the south continue to risk failure because they lack the necessary management skills to take their companies forward.

Research by R3, the organisation which represents professionals working with under-performing businesses, regularly assesses the reasons behind failure and time and time again this comes back to poor management.

Southern chairman Antony Fanshawe, also a partner in Southampton-based Fanshawe Lofts, says the results of the latest research are striking and provide serious lessons for the business community.

Its insight into corporate insolvencies in the 1990s suggests that 70,000 companies failed directly because of management incompetence.

"Almost a third of companies collapsed because of managerial incompetence from omitting to produce regular monthly accounts to fraudulent behaviour," said Mr Fanshawe. He said that government moves to encourage failed entrepreneurs to start again were welcome but more needed to be done to encourage a US-style enterprise culture in the UK.

"Entrepreneurs are not learning from their mistakes and continue failing to take action early enough to prevent disaster second time around," said Mr Fanshawe.

"Managers must improve or buy in the necessary skills to avoid corporate failure and the loss of jobs which inevitably follow."

He said that in the past ten years this lack of business acumen has cost millions of jobs and meant that creditors have lost up to 85 per cent of their debt.

"Our research reveals that around 25 per cent of insolvencies could be avoided if advice is sought earlier and more thorough training would help managers recognise the danger signs and improve recovery rates."

However, the survey does show a brighter side for R3 members who have managed to preserve 23 per cent of insolvent companies.

"This highlights a move towards a rescue culture and we calculate that this has saved more than half a million jobs in the last five years alone," said Mr Fanshawe. "What we need now is training for management and more reforms to help rescue failed companies in the future."