Are company founders holding the small business market together?
Around a third of the UK’s small businesses fear they would close down within one month should their founder suddenly leave the company, a new study has claimed.
Meanwhile nearly half of companies believe they would shut in 12 months or less should a similar scenario occur.
The figures come from Network ROI, an IT services company, and suggest that many of the nation’s smaller firms are being held together by those at the very top.
English businesses were found to be more pessimistic than those from elsewhere in the UK, with a third believing they would shut in 31 days or less were the boss to walk away.
However, this figure rose to more than 50% in the West Midlands, with the situation in some regions considerably worse than elsewhere.
Firms in Scotland have similar concerns to those in England, with more than half suggesting they would not last a year.
A quarter of Scottish firms held an even bleaker view, saying they would cease trading within one month.
It’s a different situation in Northern Ireland, where two thirds of businesses displayed confidence that they could survive without their founder.
Older staff members were found to be more bullish, as 100% of respondents aged over 65 said they believed their business would survive.
Understanding issues around succession and business continuity are essential for anyone looking to ensure that their business has a long term future.
Having plans in place in readiness for change can help limit the impact should a founder walk away, although this is still no guarantee of longevity.
Investing into these concepts could be essential for business success – figures from the Federation of Small Business highlight that up to 80% of firms affected by any sort of major issue are forced to shut down within 18 months.
Unplanned IT issues or a telecommunications outage were the major concerns, with bosses acutely aware of the costs of downtime – including in terms of revenue losses and brand damage.
Those facing financial difficulty should contact insolvency practitioners to see what approaches to take – a company voluntary arrangement might be an option for some for example, while restructuring or receivership may be an option for others.
By Phil Smith