UK enterprises left counting the cost of poor advice
Poor professional advice has caused 320,000 enterprises to lose money in the past year, according to new data from Direct Line for Business.
It is thought average losses for small and microbusinesses as a result of poor consultancy or advice amounted to nearly £21,000 per firm.
With one in six enterprises losing funds, greater pressure is falling on the shoulders of consultants to ensure that the advice they provide is not substandard.
One in five firms claimed to have lost between £50,000 and £100,000 too, meaning total losses in the region of £6.4 billion have been seen across the UK in the past 12 months due to poor advice.
IT consultancy firms were found to be most at risk of delivering poor results, blamed by 44% of businesses who suffered from receiving bad advice.
Growing dependence on IT infrastructure and the rate of technical advancements could be two reasons behind this.
Poor management and marketing consultancy were the next areas where the impacts of poor advice were felt hardest – named by 34% and 32% of firms respectively.
Property and communications were also areas that produced poor advice, but not to the same degree as the sectors already mentioned.
Many companies seek advice to aid with their everyday operations, but they have been warned to consider the impacts that it could have on their firm.
Some 46% of firms said poor advice had caused them to cut their staffing levels while 39% said it meant they had to abandon or scale back plans for growth.
A third were forced to take out credit while 28% said they were left fearing for the future of their business – potentially facing insolvency where losses escalate.
Insolvency practitioners may then be required to aid the situation, as a number of options exist that can help a company to continue trading.
Firms taking advice need to be aware of the risks, but also of the litigation processes that can be used in instances where something does go wrong.
By Phil Smith
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