Third of SMEs face critical business problems
One third of the UK’s network of small business owners say they have experienced a critical business issue that caused significant damage or disruption to their company.
The figures from Direct Line for Business show that 31% of SMEs had faced a critical issue that had impacted on their ability to do business, while also influencing relations with clients.
Among the issues were the loss of highly confidential data, damage to client business reputations as a result of poor advice or consultancy, and injuries sustained while on company premises.
Larger firms are more likely to notice problems, with issues becoming more prominent as the scale of an operation grows.
While just 8% of sole traders experienced issues, that figure rose to 25% of microbusinesses, 41% of small businesses and 62% of medium-sized firms.
Employees being injured on site was the most common issue noted by business leaders, being seen in 29% of cases, with theft and losses as a result of poor advice seen in 21% and 19% of instances respectively.
In 18% of cases, clients experienced a financial loss as a result of the services being offered by a business.
Businesses must protect themselves from these issues with the relevant safeguards and should ensure that the right procedures are followed as much as possible.
If a firm does not protect itself, it could face severe financial repercussions which may ultimately place its longevity at risk.
The cost of litigation and damages could force a company into insolvency if it does not have the surplus funds required or cannot source alternative finance options, which highlights the importance of having the right insurance cover.
Even when advice is delivered in good faith, mistakes can still happen, so cover also provides peace of mind for those with concerns.
When firms do face critical issues, 70% of small business owners said it had impacted the business, either through having to pay compensation, as a result of staff leaving, losing clients or in terms of reputational damage.
By Phil Smith
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